What is all the Buzz about LinkedIn and Does It Work?

Have you received invitations to join an online networking website? These new websites have created quite a buzz as the next big thing. People brag about having thousands of 'links' on LinkedIn.com. But this article attempts to explain what value, if any, derives from these networks. Basically, people are driven by the system to forge networks with complete strangers. One of the founders of LinkedIN, Konstantin, posted a message on another forum that was filled with idealistic platitudes that do not match the reality of LinkedIn. Here is my response to him.

KONSTANTIN: the feedback our customer service receives indicates quite clearly that most regular business people are taking aback when receiving invitations from strangers.

MIKE: Simply put, those business people do not belong in LinkedIN. People who want to be a remote island and only hear from people they know are not part of a network. They are discrete modules and demonstrate they are ignorant of the value in expanding their network, yes, to complete strangers who have better ideas, fresher ideas, and innovations they have not considered yet.

KONSTANTIN: The practice of inviting other users to connect even though they are strangers is bad for everyone-it undermines among casual users the trust in LinkedIn as a useful tool, and it doesn't help thee sender's reputation either. If not at least 80-90% of existing LinkedIn users accept your invitations, think about what this is doing to your reputation.

MIKE: LinkedIN creates its own frenzy to accumulate strangers into networks by limiting people to see only profiles of those who are in 4 degrees of the user. There are over 3.5 million users of the system, but, for example, I can only reach 2 million of them. What am I missing in the other 1.5 million? I don't have any contacts to top-tier investment banks or hedge funds, and in order to develop even a contact name, I, like every other user of LinkedIN, have to reach out to strangers who have third degree contacts with the type of firms I want to reach.

From the outset, LinkedIN intentionally sought to undermine the value of having only closely affiliated friends and colleagues in a network by limiting the ability of people to see beyond their narrow circle. There is no reason that a general search should not cover EVERY SINGLE profile in LinkedIN. By limiting us to the fourth degree contacts, everyone has an incentive to do whatever is necessary to bring the fourth degree contacts up to the total 3.5 million users if possible.

Again, if there are people who don't want to be contacted, they really have no business joining LinkedIN. It detracts from the rest of us who actually know the value of a network and of networking --- which means expanding the size of one's network.

KONSTANTIN: Other sites have failed to attract a business audience beyond networkers-LinkedIn is the first that appeals to the broad segment of relationship managers. We are trying to create the biggest possible tent and tolerate all behavior that falls within the bounds of the LinkedIn user agreement. Most of our users only invite people they know well. However, if a small minority of 1,000's of users doesn't show respect to the majority of millions and it affects how LinkedIn is perceived by mainstream business users, we will be forced into the awkward position of bouncer to protect our users from people violating the LinkedIn user agreement.

We have VPs or CEOs of 498 of the Fortune 500 on LinkedIn-I don't see them inviting strangers to add some links to their connection. If we want toemulate successful business behavior, let's start by studying those who have made it to the top . . .

MIKE: When someone reaches the level of VP or CEO of a Fortune 500 company, he or she has a built-in network and does not need to use LinkedIN, period. But for the small businessman, and those who aspire to be more than what they are today, then your LinkedIN system distorts preferences to the point that it gives every single user significant incentives to add as many strangers to his network as possible. It is all because you will not allow users to reach out and contact other users directly, and because you limit the results that show up in searches to only four degrees. Honestly Konstantin, did you put ANY thought into the limitations of your system before you launched it on the web? No wonder I have a problem getting many of my past co-workers to join LinkedIN, because they perceive it as a gimmick with no value, since their own narrow circle of friends cannot provide the business opportunities they seek.

Michael is a trilingual (English, German, French) transactional lawyer and financial manager with fifteen years experience and legal expertise in the areas of mergers, acquisitions, and divestitures; securities regulation and hedge fund creation; and deal structuring / business transactions. To further compliment his legal skill set, Michael is an experienced investment banker having worked within the top tier investment banks, namely Credit Suisse First Boston and Deutsche Bank, for an international clientele. He played an instrumental role in developing an index-tracking fund and answered technical questions on fund management marketing calls. He advised clients on pre-IPO investments, stock repurchases, and using structured finance products to manage risk. More recently, he directed the risk management and financial control groups for two trading floors.

See his web page at http://riskmgmt.biz

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