In this whole social media bubble implosion scenario, LinkedIn often gets portrayed as the angelic social media company that actually makes money and has a useful purpose compared to that wanton do-no-good social network Facebook -- until today. The social network for professionals got itself involved in a double whammy of a scandal. After Skycure Securities discovered LinkedIn's app has some privacy issues, copying full meeting notes and details from a smartphone's calendar and then sending that back to the company's servers, over 6 million of LinkedIn's passwords got hacked. Today, LinkedIn is not having a good day. But, in the long term, LinkedIn will come out just fine, still looking better than Facebook.
First off, on the scale of scandals, these are pretty minor. The password leak has the Internet mostly laughing, rather than outraged. What harm could a hacker even do with a LinkedIn password, we asked this morning. Plus, there's an easy fix: Change your password. That other breach puts LinkedIn in a bit of a stickier situation. But, lucky for LinkedIn, it's like the billionth app to take user information. We're almost numb to that, at this point, possibly because we give up our information and privacy all over the place, all the time, as this Technology Review article argues. And, in both cases, LinkedIn has done the grown-up company thing, responding right away saying the company is on both situations. It's "looking into" the password hack and has updated the app so that it no longer stores or saves any user information.
This is the first time LinkedIn has done wrong since it has gone public. Since Facebook ruined everyone else's IPOs, LinkedIn has looked like the exception to the social media bubble rule. At the AllThingsD conference, in light of Facebook's IPO failings, host Kara Swisher dubbed LinkedIn "the little IPO that could." When asking if Facebook "broke the IPO window" Forbes's Todd Hixon notes out of this year's five big tech IPOs LinkedIn is the only one that has made money. Since its public debut, LinkedIn's stock has seen a 137 percent increase in its stock price. Unlike Facebook, LinkedIn makes money, as many have pointed out.
The stock is trading a tiny bit down after these two snafus, but as LinkedIn has an actual business model, we don't foresee this blip causing a major, Facebook style, constant downward trajectory. Sure, at its core, LinkedIn is just another social network, like Facebook. But, unlike Facebook, whose advertising strategy has nobody convinced, LinkedIn has a solid money-making situation, as TechCrunch's Alexia Tsotsis pointed out the other day. "LinkedIn is as viral/sticky as Facebook but with 1) ads that monetize well; 2) a vibrant subscription business; and 3) proven management," she writes. LinkedIn has proven it can make money off its visitors and that it can keep those visitors coming back. Plus, the professional social network arguably has more utility than Facebook. "LinkedIn is a tool; Facebook is a toy," one TechCrunch commenter pointed out.
We're not saying these scandals are a good thing for LinkedIn. We just think the company can handle it. It's kind of part of growing up in the tech business world. Companies will piss users off as they grow. They can either take the Google route, pushing users away, or if LinkedIn can get beyond the inevitable growing pains, it might turn out like Microsoft, which really isn't such a bad thing.
This article is from the archive of our partner The Wire.