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How LinkedIn Is Beating Facebook

By every meaningful metric, LinkedIn is kicking Facebook's butt.
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Last week, LinkedIn reported results so positive that The New York Times credited the company (in part) with lifting up the entire stock market. Meanwhile archrival Facebook has suffered a string of negative stories, including studies revealing that most users go inactive on a regular basis, and that 50 million of its accounts are duplicates.

How awful is Facebook doing compared to LinkedIn? To find out, compare the two companies' year to year growth. As the following graph illustrates, LinkedIn is far surpassing Facebook on nearly every significant metric:

Source: Facebook's 2012 10K, LinkedIn 4Q12 Press Release

Regular readers of Sales Source might remember that I predicted back in April of 2012 that LinkedIn was a better long term bet than Facebook (which I believe will eventually go the way of Myspace.) Looks like, in the short term at least, my prediction is coming true.

To be fair, some of Facebook's 2012 drop in profitability was connected to the company's purchase of Instagram, which is an investment that still might pay off. Even so, Facebook's underperformance in revenue and user growth is pretty hard to ignore.

Why is LinkedIn doing so much better? In my humble opinion, it comes down to business fundamentals. LinkedIn has a better business model, is less vulnerable to competition, and has better (i.e. smarter and more mature) management.

It's really that simple.

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IMAGE: Flickr/Coletivo Mambembe
Last updated: Feb 12, 2013

GEOFFREY JAMES | Columnist

Geoffrey James, a contributing editor for Inc.com, is an author, speaker, and award-winning blogger. Originally a system architect, brand manager, and industry analyst inside two Fortune 100 companies, he's interviewed over a thousand successful executives, managers, entrepreneurs, and gurus to discover how business really works. His most recent book is Business Without the Bullsh*t: 49 Secrets and Shortcuts You Need to Know. If you enjoyed this post, sign up for the free weekly Sales Source newsletter.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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