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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 did a lot of business stuff and wrote a slew of articles and books. Now he writes this column. Preorder his new book, Business Without the Bullsh*t, by May 12 and get an exclusive bonus chapter and a signed bookplate.
@Sales_Source




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