Blitzscaling Session 9: Village Stage

CS183C: Blitzscaling

Instructors: Allen Blue, Reid Hoffman, John Lilly & Chris Yeh

October 20, 2015

Organizational Scale 3: Village

Now for the big shift.

Class Structure: Organizational Scale

Org Scale (employees)

User Scale (B2C users)

Customer Scale (B2B)

Business Scale (rev)

OS1: Family 1s 10,000s 0 <$10M

OS2: Tribe 10s 100,000s 1s $10M+

O3: Village 100s 1,000,000s 10s $100M+

OS4: City 1,000s 10,000,000s 100s $1B+

OS5: Nation 10,000s 100,000,00+ 1,000+ $5B+

OS1: The Household

Identify a non-obvious market opportunity where you have a unique advantage and/or approach. Iteratively build a product with strong product/market fit

OS2: The Tribe

Execute & iteratively improve a plan which gets you to significant market share.

OS3: The Village

Identify, plan and execute the core business you will scale up.

OS3: The Village


… with a plan to scale more

OS3: The Village


… with a plan to scale more

… and do it fast

OS3: The Village

1. Articulate the core business you will scale up first

2. Identify critical steps to scale that business3. (Hyper)grow an organization to execute it4. Finance for hypergrowth and future growth

OS3: Articulating the Core Business

Goals for the core business:1. Create continued growth2. Generate growing revenue3. Build competitive advantage4. Grow strategic assets for later opportunities

LinkedIn All-HandsFebruary 17, 2010

OS3: Critical Components to Scale the Core Business

• What must you do to scale the core business?

• Across growth, revenue

• Product and Technology

• Go-to-market (sales, marketing)

• Partnerships

Product PlanFebruary, 2010

Viral Growth Engine Continue viral engine improvements to drive member growth and critical mass within professional context

Example products: Reg. optimization, New User Experience, In-Box, Outlook Integration, SEO, Address Book

Tabl

e st

akes

Professional Identity ecosystem Establish leading identity ecosystem by building upon unique database of 60M+ members

Example products: Profile improvements/game dynamics, SEO, Search, APIs, Mobile

Professional Insights & Knowledge Sharing Be the essential source for professional shared knowledge and business intelligence

Example products: NUS, Sharing tools, Groups V2, Inapps, Outlook & Twitter Integration

Gam

e ch

ange

rsVa

lue

Firm Foundation Improve and scale site resilience & reliability, development productivity, data reliability, API’s

Measurements: uptime, load time, developer activity,

Underlined: New focus in 2010

Data

Targeting & analytics

WVMP, MyStats

Matching

PYMK

Warehousing Mining

Global Monetization Leverage unique business model to monetize assets while adding value to members on a global basis

Example products: Online Jobs, Recruiter, Premium subs, Display Ads, Self-serve Ads, Business Pages

Strategic Stack

Strategic Stack

Security Addressbook bcard SkillsCode Modularity Profile - Engagement Apps / InAppsProductivity Tools APIs Career CenterDistributed Computing Rec Engine / Intelligence SalaryData Reliability / Scale Engine / WVMPFeature APIs MobileReg Optimization / NUX Business PagesPYMK International - LanguagesSEOAddress BookProfile - DataInbox / CommCore SearchNUS / SharingGroupsStandardizationA/B Testing PlatformOnline JobsSubsRecruiterPayment PlatformsDirectAdsDisplay SupportCS Tools

Core Strategic Venture

Talent Solutions GTMMarch, 2010

LinkedIn 3.0 / Scaling 10xFebruary, 2010

OS3: Organization

• Your organization has to change fundamentally

• The right CEO

• Key executives for critical areas

• Core mission, culture, and values to enable rapid distributed scaling

• An HR function that can hypergrow

• Necessary processes to allow large groups to work together

• Navigate necessary changes among founders and early employees

• Robust reporting to allow business not only to learn, but also to plan

Leadership, Culture, Hiring, Process2008-2010

© 2009 LinkedIn All rights reserved. Confidential 60

LinkedIn Values and Culture

Members Come First - Candidates are also our members, leave them feeling great about LinkedIn regardless of our decision to hire or not. Be compassionate, offer to take a candidate for a quick walk, for a break, offer snack/beverages if they look tired.

Relationships Matter - Candidates will either advocate us, say nothing about us, or speak negatively about us based on how we treat them. Glassdoor.com and other sites/blogs keep all companies on their toes in terms of reputation and sharing stories.

Open, Honest and Constructive - consider this as you answer the candidate’s questions and as you write your own feedback after the interview.

Demand Excellence - consider this not only of the candidate but yourself regarding how you conduct the interview... don’t focus too much on technical/analytical skills so they overshadow your assessment of the candidate’s creativity and vision.

Take Intelligent Risks - If the candidate doesn’t have the experience in the talent solutions space or social media, or if you initially rate as B+ rather than A+, as yourself if they have the raw materials and potential to become an A+ within a short timeframe.

Act Like an Owner - Talent is our most important asset. We expect our employees to act as an owner in each decision they make, no matter how big or small.

Transformation of world, company and self

Integrity

Collaboration

Humor

Results

Tech All-HandsDecember, 2009

People/Recruiting/Hiring

● Best people produce best outcomes

● Need to keep bar high in the hiring/recruiting process

● Need to understand our limitations and bring outside expertise where needed

● Need to be flexible in our resource allocation (it is okay/desirable to move around the organization to apply key personnel to key projects)

● Onboarding/Ongoing Training/Mentoring are key.

Why technologists want to work at Linkedin

● Having a positive/lasting impact on the world by developing products that create economic opportunities for people on a global basis.

● Building systems that scale and perform is paramount (think 10X).

● Data drives our solutions: Searching, querying, analysis of this data in real-time, near-real time, or batch creates value for our users, and our paying customers.

● The business models (Subscription, Corporations, Advertising) are a diverse source of revenue that require real value propositions, and technical excellence in delivery.

● Combining speed of execution with quality solutions, while still pushing the envelope on new/improved features requires engineering skill sets that are unheard of in traditional enterprise computing, and are hard to find even in the Internet.

● Engineers will constantly learn/use new technologies to create leading edge solutions.

● Great engineers want to work with great engineers.

● Constant improvement requires new talent/additional expertise to solve new/difficult challenges.

● When you come to work here, you will, by definition, have a large impact. ~ 150 technologists today

● Access to the senior leadership is real, actual, and actionable. CEO->VP->Director->Manager->Engineer

Site Up -> Company Up

What do we want? ● Scrum vs. Waterfall: not the question; want best quality in timely fashion; good

outcomes depend on good engineers + good engineering practices (AND function required here)

● Prioritize the list of Infrastructure + Product features merge sorted: We apply resources against that list, and the result is 2 clear choices, either add more people or cut the line higher so that some things don’t get done (ideally there is no distinction between features and infrastructure in our shop)

● Will have multiple serving data centers running: ETA likely > = 1 year

● Architecture: we will tease apart dependencies for our 180 subsystems so that we can have SLA’s for each one that we can trust and adhere to. All calling services must be resilient to failure of called services. (Service oriented architecture)

● The Data scaling concern demands a solution: Examples: Comm, DWH, volume of members, search index.

● Reminder: We have scaled this most excellent service successfully to this point. Now we need to go to the next level. Think 10X and 100X. How would we solve for that?

Current Release Process

Release Process Gap – Changes Needed ● The Current Process – What we do today

● Testing earlier for features: Example: the 26 feature branches in R951.

● Stabilizing the code base for integration

● Practice on staging

● Deploy a well tested reliable solution on prod

● Concern with this model ● It’s a long cycle (see previous slide) 2.5 week duration due to merges, compatibility testing, configuration

validation, heavy track team involvement etc…

● We still have large releases with many dependencies (some of which are not understood) which increases our risk

● Inconsistent tooling across environments (Do we have enough envs?)

● Many release processes are still manual

● Post release hangover that says fix on fail: Bug fix releases are an assumed part of the Release Process. Our goal should be to eliminate the need for this step.

● What do we want? ● Shorter cycle

● Smaller releases with “no” dependencies decreasing the risk. Each component released must be able to be pushed and rolled back if needed.

● Automation for push-button releases (What if we were deploying to 5,000 servers not 500?)

● Don’t need to be fixing on fail because there are no bugs introduced into Prod

● Release when ready: (What does this mean?) a) Don’t release it on schedule because it didn’t pass our tests OR b) Release any module anytime with low risk. I want B.

LinkedIn Series DSummer, 2008

Global Internet Business Platform and Applications

LinkedIn - Confidential 2

Investment Snapshot

2008E Rev $82 million / 2.6x 2007

Members 20 million, adding 1M+ per month at ~$0 CPA

Unique visitors1

6.6 million / 2.8x y-o-y

Email addresses

384 million

Connections 260 million

Bookings ($MM)

2006 2007 2008 Subscriptions $6.3 $17.3 $33.0 Jobs 2.1 6.3 15.1 Advertising 2.1 7.8 30.1 Corporate 1.8 7.9 34.5 Total $12.4 $39.2 $112.6

Investors Sequoia, Greylock, Bessemer, Marc Andreessen, Peter Thiel

1 comScore January 2008 data

The next massive business model in technology

▪ ~ $0 CPA per member, 1M+ / month

▪ High margin product: all digital goods, micro cost of sale

▪ Highly scalable: digital goods, infinitely replicable

▪ Network effects: network between users, network between business lines

▪ Huge markets: recruiting, media, services, sales, productivity software and others

➢ Google for finding professionals

➢ eBay for Labor Markets

➢ Microsoft for Internet productivity


Summary

The Network

Key Differentiation: - Business focus: features, brand, network - Viral growth: entirely by individuals’ actions - Value scales with entire network (network effects) - Growing in every industry, globally - Organic growth into every business


Largest Professional Network

Domestic

Growth Days

0 to 1MM members 477





199 of top 200 markets grew 70%+ in 2007; 155 grew 100%+

0

5

10

15

20

5/1/03 9/1/03 1/1/04 5/1/04 9/1/04 1/1/05 5/1/05 9/1/05 1/1/06 5/1/06 9/1/06 1/1/07 5/1/07 9/1/07 2/1/08

Domestic International

Mill

ions

of m

embe

rs

Globally x4 larger than nearest competitor; 50x larger in the U.S.


Best and Broad Demographics

School: 58K HBS: 17K

School: 50K GSB: 8K

13K

32K

19K

13M University Alumni

31K

Employees: 58K Alumni: 23K

19K



1.9M F500 Employees

41

27%

$109,762

Demographics

Average Age

Average HHI

HHI >$150K

78%College Grad

Portfolio $250K+ 28%

1.2M Small Business Owners

2.2M Senior Executives

VPs at every F500 company

Source: @plan Winter 2007/2008, internal data

13K


http://images.google.com/imgres?imgurl=http://www.collegefastbreak.com/wp-content/uploads/2007/10/stanford.gif&imgrefurl=http://www.collegefastbreak.com/stanfords-twin-towers-down-to-one/&h=536&w=351&sz=12&hl=en&start=11&tbnid=WbqfWm_gYtrK2M:&tbnh=132&tbnw=86&prev=/images%3Fq%3Dstanford%26gbv%3D2%26hl%3Den


Summary

Media Key Differentiation: - User generated content - Best of class demographics - Unique targeting capabilities - Organic growth in every industry, globally - Ability to scale across the web - Future possibilities with self-service, B2B lead gen


0$100

12.5$100

25$100

37.5$100

$100$100

Dice Monster HotJobs eBay Google Xing

LinkedIn Revenue Upside

$86.91

Mean:$34.05

Mean:$21.08

Mean: $10.52

Upside revenue opportunityCurrent revenue projections

Job boards Internet leaders

Business/ social networking

Revenue/worldwide unique visitors

$0

$200

$400

$600

$800

$1,000

2007 2008E 2009E

($34.05 Ave Rev/User)x 5.5MM Uniques)

($34.05 Ave Rev/User)x13.4MM Uniques)

($34.05 Ave Rev/User)x25.0MM Uniques)

LinkedIn potential revenue

Appendix

Articulating biz

The Bullseye

Jeff’s articulation of LinkedIn’s bullseye: Talent Solutions

Description of the business: Passive Recruiting and how it works.

Main point is the clarity with which we chose this target, and were willing to subordinate almost everything but user growth to it.

User Growth

User Growth understood as:

Viral tuning

SEO and Public Profiles

Some known user value (network updates via email, receiving job offers)

Some user value experiments (news, app platform, etc.)

Revenue Growth

Main focus on revenue growth will be growth of field sales

Reasoning for this

Some online sales, but not for big-$$ accounts

Other revenue sources beginning to enter the mix, but not core

Strategic Moats

Professional Identity would be primary moat

Defined roughly as size of network x quality of average profile

Main contributors were user growth and user activity.

Also first-mover advantage on passive recruiting would allow us to lock in customers.

But we also felt we needed to respond to Facebook’s F8 announcement, which might have created a competitor built on top of FB.

Future strategic assets

Non-Jobs brand

Potential discover of additional value propositions

improves brand,

Drives growth and profile moats

builds additional platforms for future businesses

Summary

A growing network of professionals with valuable profiles, driven by viral tuning and value experimentation

Will form the foundation for a sales-driven business focused on large enterprise accounts…

And we will do some competitive blocking on App Platforms.

Key steps to succed

Changing roles for founders/early team

Jean-Luc, engineering changes

New engineering group leaders

Turnover with new execs

Data

Building our data function

Daily, 7-Day Cumulative Avg, Week over Avg 4 Weeks, Year over YearMetrics:

Signups

0

22,500

45,000

67,500

90,000

112,500

-40%

0%

40%

80%

120%

6/8/

09

6/17

/09

6/26

/09

7/5/

09

7/14

/09

7/23

/09

8/1/

09

8/10

/09

8/19

/09

8/28

/09

9/6/

09

9/15

/09

Daily 7-Day Cumulative Avg Week over Avg 4 WeeksYear over Year

Guest Invites

0

100,000

200,000

300,000

400,000

500,000

600,000

-100%

0%

100%

200%

300%

6/8/

09

6/17

/09

6/26

/09

7/5/

09

7/14

/09

7/23

/09

8/1/

09

8/10

/09

8/19

/09

8/28

/09

9/6/

09

9/15

/09


Uniques

0

1,600,000

3,200,000

-80%

0%

80%

160%

6/8/

09

6/17

/09

6/26

/09

7/5/

09

7/14

/09

7/23

/09

8/1/

09

8/10

/09

8/19

/09

8/28

/09

9/6/

09

9/15

/09


Page Views

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

-100%

0%

100%

200%

300%

6/8/

09

6/17

/09

6/26

/09

7/5/

09

7/14

/09

7/23

/09

8/1/

09

8/10

/09

8/19

/09

8/28

/09

9/6/

09

9/15

/09


Searches

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

-160%

0%

160%

320%

6/8/

09

6/17

/09

6/26

/09

7/5/

09

7/14

/09

7/23

/09

8/1/

09

8/10

/09

8/19

/09

8/28

/09

9/6/

09

9/15

/09


Premium Subs (New + Recurring)

$0

$40,000

$80,000

$120,000

$160,000

-80%

0%

80%

150%

6/8/

09

6/17

/09

6/26

/09

7/5/

09

7/14

/09

7/23

/09

8/1/

09

8/10

/09

8/19

/09

8/28

/09

9/6/

09

9/15

/09


Members Joining Groups

0

40,000

80,000

120,000

160,000

-80%

0%

80%

160%

240%

320%

6/8/

09

6/17

/09

6/26

/09

7/5/

09

7/14

/09

7/23

/09

8/1/

09

8/10

/09

8/19

/09

8/28

/09

9/6/

09

9/15

/09


Groups Created

0

500

1,000

1,500

2,000

2,500

-100%

0%

100%

200%

300%

6/8/

09

6/15

/09

6/22

/09

6/29

/09

7/6/

09

7/13

/09

7/20

/09

7/27

/09

8/3/

09

8/10

/09

8/17

/09

8/24

/09

8/31

/09

9/7/

09

9/14

/09


Job Dollars

$0

$10,000

$20,000

$30,000

$40,000

$50,000

-80%

0%

80%

150%

6/8/

09

6/17

/09

6/26

/09

7/5/

09

7/14

/09

7/23

/09

8/1/

09

8/10

/09

8/19

/09

8/28

/09

9/6/

09

9/15

/09

Daily 7-Day Cumulative Avg Week over Avg 4 WeeksYear over Year Add a Comment

Comments

9/9/20094:10:27 PM

8/20/20099:05:35 PM

8/20/20096:13:53 PM

8/19/20097:34:57 PM

8/19/20096:54:30 PM

8/19/20096:54:12 PM

8/19/20096:53:46 PM

8/11/20098:42:25 PM

W/W jobs increase driven by 10% morespend per buyer due to job pack purchasesand 8% better conversionFor Jobs on Wednesday, 8/19: Conversiondecreased 9% W/W but spend per buyerincreased 6% and traffic to the flowincreased 3%. We’re investigating the rootcause of the conversion decreases thatwe’ve been seeing.New subs bookings growth driven bygreater number of annual plans purchasedrelative to monthly plans (Business YR up24% wk/wk and Business Plus YR up 18%wk/wk)“W/W declines driven by drops inconversion and spend per buyer. All handsare on deck investigating if something inlast week's release or Saturday's Oracleupgrade is causing this.”Online Job sales were down –17% Y/Y at$39.7K but are trending towards being upY/Y in the next 3 weeks.Page Views came in at 45.8M for Tuesday,the largest day since 27th January and thesecond highest day ever, up 78% Y/Y.Signups came in at 108.5K for Tuesday, thelargest day since 27th January.The spike in the year over year numberstowards the end of May 09 is due to a siteoutage in May 08

Daily Executive Dashboard

Blitzscaling Session 9: Village Stage

Small Business & Entrepreneurship

Transcript of Blitzscaling Session 9: Village Stage