LinkedIn which has been around since 2003, made its first acquisition a couple of weeks ago. The target was Mspoke, a 4 year old startup from Pittsburgh. Given the standard problems of integrating a geographically distant company, why did LinkedIn make this move? Recent changes in the LinkedIn service and Mspoke’s core competency give us a clue. For the last couple of years, LinkedIn has been mimicking features successful on Facebook and Twitter. Examples include the newsfeed and follow. Further, Linkedin recently integrated Twitter into it’s service, allowing users to auto-post their tweets to LinkedIn. Combined with the Group Updates functionality on LinkedIn, these changes have probably resulted in a deluge of user generated content. Linkedin users are likely struggling from information overload.
Mspoke claims that it has recommendation technology that can cut down such overload. In the past Mspoke has used its technology to power personalized email newsletters for MedPage Today - instead of blasting out the same email to all subscribers, Mspoke enables email subject and article sequence customization based on each users observed interests. Further Mspoke has used the same technology to extract market signals from the heaps of daily business updates, for Wall Street traders. It is likely that LinkedIn bought Mspoke so that it could apply the recommendation technology to a user’s newsfeed and perhaps even to the periodic email updates that users subscribe to.
There are atleast two other applications of Mspoke technology that would be meaningful to Linkedin. LinkedIn earns most of its revenues from Recruiters who pay for features that allow them to track, organize and contact potential employees. Mspoke’s technology could be used to provide more value to these recruiters by “suggesting” candidates that a particular recruiter should go after. LinkedIn could also use Mspoke’s technology to determine which ads to show to its non-recruiter users. Or for that matter, to auto-populate a portion of an Ad based on the users profile and past behavior - such auto-population may result in higher click through rates and thus higher Ad revenues.
Provided that LinkedIn can successfully integrate Mspoke, the acquisition makes a lot of sense. And not just for the reasons mentioned above. LinkedIn’s subscribers growth is unlikely to plateau anytime soon. As more users join LinkedIn, connect with each other, join company/industry groups and link their twitter accounts, user generated content on LinkedIn will continue to grow. LinkedIn will need Mspoke to help its users manage all this content.
Anyone in the industry could tell you that mspoke's technology is primitive and ineffective. The company failed to gain any traction, I think the acquisition was a mistake.
ReplyDeleteWhat the author failed to acknowledge is top talent is hard to find. Talent acquisition and use existing talent to optimize mspoke software seems like a pretty sweet deal.
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