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Handshake and circuit board (© 2003 Thinkstock LLC)
Handshake and circuit board (© 2003 Thinkstock LLC)

How LinkedIn makes money post-IPO Add to ...

To the average user, LinkedIn may seem like nothing more than a professional Facebook, or the place where you actually accept your manager's connection request.

But for corporations, it's a very useful tool that lets them target the kind of people they want to hire. Think about it, most of your work history is up there, and if you're a keener, you probably have some of your professional accolades listed as well. If a firm wanted to hire someone just like you (and who wouldn't!), LinkedIn could help them do just that.

As it turns out, that side of the business will drive the company post-IPO. To get a sense of how big it is now, in 2010 LinkedIn generated $243-million (U.S.) in revenue, more than double what it made in 2009, and $102-million of that came from corporate 'hiring solutions.'

(Overall the company made a $15-million profit last year, and has already generated $94-million in revenue in the first three months of 2010.)

LinkedIn's corporate solutions allows companies to identify job candidates based on things like their industry, job function, geography, experience and education. This segment also lets firms put up a job posting on the site, making LinkedIn something like Monster or Workopolis. The company has stated that growth here depends on getting new clients, but that task has gone well so far. LinkedIn had about 5 million corporate solutions clients on March 31, much higher than the 1 million they started 2009 with.

The company's other two revenue steams come from selling ads on its site, and selling premium subscriptions. While it might seem like getting users to pay more money might be a good goal, forcing users to pay would hurt their corporate side if hoards of people quit the site.

Marketing generated $79-million of the company's revenue last year while premium subscriptions brought in $62-million.

Although LinkedIn has only been in the news for, say, the past three years, the company actually started up in 2003. The biggest shareholders include Reid Hoffman, who was previously tied to PayPal, and venture cap firms like Sequoia Capital and Greylock Partners. Mr. Hoffman is the biggest shareholder, owning 21 per cent of the company.

LinkedIn Corp. currently has more than 100 million members and boasts 75 million average unique users per month in the first quarter of 2011. For comparison's sake, Facebook has more than 600 million users.

The IPO is expected to raise $275-million.

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