LinkedIn’s layoffs are a cautionary tale


One of the worst things you can say about a startup is that it’s “a feature, not a product.”


It means that while the idea may be good, it’s not enough for a standalone product. Competitors can easily replicate the idea and incorporate it into their suite of features. A product, however, is a robust experience that keeps users engaged on a near-daily basis.


For an example, we can look to LinkedIn, the professional network that laid off a staggering 6% of its workforce last week.


The saddest thing about LinkedIn’s recent struggles that it was entirely avoidable, and their struggles are a perfect example of what happens to a platform when it fails to innovate and develop new, exciting features to augment its core business.


LinkedIn is laying off a chunk of its staff because companies are hiring significantly less during the Covid pandemic, meaning less demand for LinkedIn’s recruitment tools, its main line of business.


The real issue, though, is that LinkedIn has turned into a one-dimensional platform that has little utility outside of when you’re either searching for a new job or looking to fill a job at your company. And that problem will last beyond the pandemic.


For years, LinkedIn’s core business has been its recruitment and job posting tools. Headhunters, staffing firms and job seekers pay good money for LinkedIn premium, which allows them unfettered access to LinkedIn’s network and the ability to message hiring managers and prospective employees directly.


Matching people with new jobs is an excellent business under rosy economic conditions, but as LinkedIn’s layoffs show, it’s not recession proof. And it underscores LinkedIn’s inability to build upon its core competency the past several years.


LinkedIn could have become the ultimate B2B platform — a comprehensive destination for all of a person’s business needs that includes business news, an internal management and messaging system, tools for generating sales leads and a marketplace for buying and selling goods and services.


Instead, LinkedIn has sat idly by while other startups have pursued these lines of business.


Imagine how powerful LinkedIn would be as a CRM tool. Salespeople could plug into  LinkedIn’s network and use it to identify, contact and track new sales leads. But LinkedIn never developed that capability, and now that industry is dominated by Salesforce, a $170 billion business in its own right.


LinkedIn could have created a slew of enterprise tools, in fact. LinkedIn is owned by Microsoft, after all, and Microsoft could have combined LinkedIn’s networks with its Skype, Outlook and Microsoft Office businesses to create the premier workplace communication platform. Rather, Slack, Zoom and Google have filled that void.


Meanwhile, LinkedIn has completely lost out on the gig economy. LinkedIn is great for filling full-time positions, but it’s useless when it comes to hiring freelancers for short-term projects. LinkedIn could have dominated the booming freelance market had it altered its platform for their use, but it’s been surpassed by gig economy platforms Fiverr, Indeed and Upwork. Sites such as Etsy, Patreon and Substack  allow creators to monetize their work directly. LinkedIn has no such offering.


LinkedIn has tried to build a content offering around its professional network, but instead of prioritizing valuable business news, the LinkedIn news feed is flooded with people congratulating themselves on a new job or a recent business milestone.


If LinkedIn wants to be successful, it should look to Facebook for inspiration. Facebook realized long ago that its days were numbered as the cool new social media platform. Facebook countered the competition either by co-opting their defining features (like when Instagram launched Stories, Snapchat’s signature feature) or acquiring them outright (like when Facebook bought WhatsApp).


Unless it changes course, LinkedIn seems destined to become a site like Monster or CareerBuilder.


Those companies had novel products when they first launched. But they failed to innovate, and over time, those products became mere features. That’s why they faded.