For a Web site, it could hardly look less exciting. Its pages are heavy with text, much of it a flat blue, and there are few photos and absolutely no videos. But LinkedIn, the social network for professionals, is dull by design.
Unlike Facebook and MySpace, the site is aimed at career-minded, white-collar workers, people who join more for the networking than the social.
Now, in the midst of Silicon Valley’s recession-proof enthusiasm for community-oriented Web sites, the most boring of the social networks is finally grabbing the spotlight.
On Wednesday, LinkedIn will announce that it has raised $53 million in capital, primarily from Bain Capital Ventures, a Boston-based private equity firm. The new financing round values the company at $1 billion.
That heady valuation is more than the $580 million that the News Corporation paid for MySpace in 2005, but less than the $15 billion value assigned to Facebook last year when Microsoft bought a minority stake.
LinkedIn’s investment round delays a rumored initial public offering, which would have finally tested the public market’s interest in social networking.
“What we didn’t want is to have the distraction of being public and to be worried by quarterly performance,” said Dan Nye, the buttoned-down chief executive of LinkedIn, who would not be caught dead in the Birkenstocks and rumpled T-shirts favored by MySpace and Facebook employees.
LinkedIn, which says it is already profitable, will use the investment to make acquisitions and expand its overseas operations.
“We want to create a broad and critical business tool that is used by tens of millions of business professionals every day to make them better at what they do,” Mr. Nye said.
The average age of a LinkedIn user is 41, the point in life where people are less likely to build their digital identities around dates, parties and photos of revelry. LinkedIn gives professionals, even the most hopeless wallflower, a painless way to follow the advice of every career counselor: build a network.
Users maintain online résumés, establish links with colleagues and business acquaintances and then expand their networks to the contacts of their contacts. The service also helps them search for experts who can help them solve daily business problems.
The four-year-old site is decidedly antisocial: only last fall, after what executives describe as a year of intense debate, did the company ask members to add photos to their profiles. That business-only-please strategy appears to be paying off.
The number of people using LinkedIn, based in Mountain View, Calif., tripled in May over the previous year, according to Nielsen Online. At 23 million members, LinkedIn remains far smaller than Facebook and MySpace, each with 115 million members, but it is growing considerably faster.
LinkedIn also has a more diversified approach to making money than its entertainment-oriented rivals, which are struggling to bring in ad dollars and keep up with inflated expectations for increased revenue.
LinkedIn will get only a quarter of its projected $100 million in revenue this year from ads. (It places ads from companies like Microsoft and Southwest Airlines on profile pages.) Other moneymakers include premium subscriptions, which let users directly contact any user on the site instead of requiring an introduction from another member.
A third source of revenue is recruitment tools that companies can use to find people who may not even be actively looking for new jobs. Companies pay to search for candidates with specific skills, and each day, they get new prospects as people who fit their criteria join LinkedIn.
LinkedIn is set to undergo a radical shift in strategy to find other sources of revenue.
Instead of catering primarily to individual white-collar workers, the site will soon introduce new services aimed at companies. It is a risky move that could alienate members who prefer to use the networking site to network — without their bosses peering over their shoulders.
One new product, Company Groups, automatically gathers all the employees from a company who use LinkedIn into a single, private Web forum. Employees can pose questions to each other, and share and discuss news articles about their industry.
Soon, LinkedIn plans to add additional features, like a group calendar, and let independent developers contribute their own programs that will allow employees to collaborate on projects.
The idea is to let firms exploit their employees’ social connections, institutional memories and special skills — knowledge that large, geographically dispersed companies often have a difficult time obtaining.
For example, in a test of the feature by AKQA, a digital ad agency in San Francisco, an employee based in Amsterdam recently asked her 350 colleagues on LinkedIn if the firm had done any previous work for television production companies. Executives in San Francisco, New York and London promptly responded to the query.
“This is a collected, protected space for employees to talk to each other and reference outside information,” said Reid Hoffman, LinkedIn’s founder and chairman.
Becoming even more corporate is something of a gamble for LinkedIn.
Many companies might resist the idea of confidential corporate information circulating on LinkedIn’s servers — and perhaps being exposed to former employees who are included in the group because they have not updated their LinkedIn résumés.
(LinkedIn says every member of a company group can remove people whom they identify as former workers or interlopers.) Diffusing the purpose of the site might also repel some users.
“It will be extraordinarily challenging to simultaneously serve as a corporate tool and yet promote the ‘brand of me’ in an emerging free-agent nation,” said Keith Rabois, a former LinkedIn executive who is now vice president at Slide, a maker of applications for social networks.
Jeffrey Glass, a partner at Bain Capital, says his firm invested in LinkedIn primarily because it is now becoming popular enough to introduce these kinds of products to companies and other organizations, like universities.
“This is a powerful tool because inside the corporation, there are massive bodies of knowledge and relationships between individuals that the corporation has been unable to take advantage of until now,” he said.
The new services could help LinkedIn fend off some new competition.
Microsoft, long covetous of rapidly growing social-networking properties, is internally testing a service called TownSquare that allows employees of a company to follow one another’s activities on the corporate network.
Executives at Facebook, meanwhile, have recently said that they see networking tools for professionals as a primary avenue of growth. The site recently added networking to the list of options that new users select when they are asked to specify what they intend to do on the site.
Mr. Hoffman was an early investor in Facebook and says he does not want to disparage the competition. But he said that most members of Facebook who are older than 30 use it for entertainment, like playing Scrabulous, a version of Scrabble — not for doing their jobs.
“Scrabulous is not work, and it does not enable you to be an effective professional,” he said.