Microsoft has stirred up a swirling buzz of discussion around the Linkedin acquisition for $26.2 billion. There are a number of angles that have been considered in the gazillion news stories floating around. Here’s a few of those threads:
- Linkedin is a Salesforce counter by Satya Nadella — It has been argued by Steve Nellis and others that Linkedin’s efforts at developing and selling the tools in the company’s Sales Solutions unit have not gone very far, but the data in Linkedin’s network — when coupled with Microsoft’s own Salesforce competitor — Dynamics — could become a real player. Note that Nadella’s rumored efforts to acquire Salesforce stalled because of a too-high price tag (10X revenues), while Linkedin was much more affordable (7X revenues). Plus, with Linkedin in there are other angles to play.
- Linkedin is a professional social network, and could counter Facebook for Business — Facebook has not yet released its business variant, Facebook for Business, but it’s supposed to roll out this year. Nadella might be trying to get there first by offering a fusion of Linkedin’s current mix of blogging, social networking, and recruitment use cases with Office 365 productivity options. Linking together the professional graph (Linkedin) with the work graph (Office 365) and getting a premium on the integration of the two is probably a smart move so long as the seams can be made low friction. There is a devil in these details, but this is one of the most powerful visions for the merger.
- Linkedin alone was a company with real problems — Linkedin stock got hammered earlier this year after lowered sales estimates. This would be bad in itself but doubly bad for Linkedin, since many of its best and brightest are compensated in part by stock grants, so when the stock falls, so does compensation. As a result, Linkedin was facing a mass exodus unless they could right the boat. This is one of the reasons Microsoft got the terms that it did. And now, people will be compensated in the more standard Microsoft way (as will the accounting for these expenses, which were clouded by non-GAAP practices).
- Microsoft sees Linkedin as a way to deflect Slack — Personally, I don’t buy this conflation of threats to Microsoft. Yes, Slack is making huge inroads in work technology — specifically as the defining product in the exploding work chat space — but just because is has some of the features of a ‘social network’ (in that people are logged in for long periods of time each day, message each other, can coordinate outside of company boundaries) that doesn’t mean Slack and Linkedin are in some way head-to-head competitors. Yes, Slack is a competitor to Microsoft’s productivity/work technology products — most specifically Yammer, but also the core functionality slowly growing in Office 365 — but that doesn’t mean that Linkedin is intended as a Slack killer. Although Microsoft should be working on that, as well. I just don’t expect it will come from the Linkedin side of things.
After all the dust settles I expect that we’ll see a reoriented Linkedin, with a greater focus on CRM technologies and networking, and also a much enlarged focus on people operations (HR) technologies and networking, an area that Microsoft has functionally no offerings. This will take the form of enlarged platforms, and an ecology of partners building on Microsoft/Linkedin capabilities, as well as other, subsequent acquisitions. And Linkedin will immediately find its operational core — and culture — pulled toward CRM and HR by the Microsoft sales operation.
I also don’t believe that Jeff Weiner will be at Microsoft for longer than his required tenure, two years or whatever it is. More likely he will find new worlds to conquer, and Satya will find someone in Microsoft or Linkedin who will better execute what will rapidly become an integration strategy, rather than a trailblazing one.
