LinkedIn, the professional social network, announced today that it's acquiring the online education company Lynda.com for $1.5 billion.
Lynda.com, an Inc. 5000 company, was founded in 1995 by Lynda Weinman and her husband, Bruce Heavin, in Carpinteria, California. The company offers users professional development through thousands of videos and other course materials in areas including business, design, software, and education.
While that sounds like a smart, if expensive, choice for a company that wants to amp up its presence as the premiere professional social network, industry analysts and venture capitalists are starting to wonder--what might LinkedIn acquire next?
The purchase of Lynda.com suggests that LinkedIn is trying to burnish its credentials as a professional network, moving beyond simple resume listings, to more actively help professionals seeking jobs and recruiters looking for candidates make more intelligent choices. To that end, you can expect LinkedIn to make future buys that strengthen vertical segments like sales, where it already has a base, as well as broader plays, including job marketplaces.
"You can be sure they are looking to augment the company's long-term market potential in a way that produces recurring revenues," says Randle Reece, a senior research analyst at Avondale Partners, in Nashville.
To that end, it's not inconceivable that LinkedIn might make purchases that bolster its recently launched Sales Navigator platform, which helps salespeople tap active buyers for their products. So customer relationship management (CRM) company Clearslide, which allows users to do sales demonstrations on the Web, might be one target, technology experts say. Similarly, Brainshark, which does sales training and sales process enablement as well as CRM, might be another possibility, say Ross Fubini, partner at venture capital firm Canaan Partners, in Menlo Park, California.
"More broadly, Salesforce and LinkedIn will cross over more so now than they have in the past," Fubini says.
But LinkedIn might also think about getting into the contract- or freelance-jobs marketplace as well, analysts say. In that case, potential purchases could include 99Designs, the graphic design marketplace, as well as oDesk and Taskrabbit, which tackle a broader range of services.
LinkedIn, which went public in 2011, has about 350 million users in 200 countries. More than half of the company's $2.2 billion in net revenue for the full year 2014 was derived from its Talent Solutions product, which gives recruiters a way to search LinkedIn's network for job candidates. About 20 percent of LinkedIn's revenue comes from the sale of its premium services to members. (LinkedIn reported a loss of $15 million for the full year 2014.)
Aspects of both the free and premium services match the skills of the members with those required for jobs, identifying weaknesses. So by hooking up with online education company Lynda, which can help users beef up skills where they may need more development, for example in Excel or AutoCad, LinkedIn has made a potentially good, strategic move, says Reece.
Other areas where LinkedIn might try to make purchases or partnerships, generally speaking, would be in online professional credentials, such as in human resources management, Reece says. In which case, we could see arrangements with professional organizations such as the Society for Human Resources Management.
To date, LinkedIn has made 15 acquisitions, but Lynda appears to be its most expensive, as well as the company's first foray into online education.
In 2014, LinkedIn surprised some tech analysts when it purchased Newsle, a web application company that notifies LinkedIn users when their connections appear in the news. Though terms of that deal were not disclosed, it purchased Pulse, a news reading app company, for $90 million in 2013.
With the acquisition of Lynda, LinkedIn could suddenly become an even more vital resource to its users.
"The mission of LinkedIn and the mission of Lynda.com are highly aligned," Jeff Weiner, chief executive of LinkedIn, says in a statement. "Both companies seek to help professionals be better at what they do."