On Friday, April 10, 2015 LinkedIn, the most popular employment social network, purchased education company Lynda.com for a $1.5 billion in cash and stock. Since being founded 12 years ago, LinkedIn has purchased its fair share of companies, but this acquisition is by far the largest they’ve ever made. LinkedIn has made 14 acquisitions over its lifetime. The details of eight of those deals have been made public, and they only total around $525 million. Experts estimate that the remaining four deals we don’t know about probably didn’t amount to much more $50 million total. So this means that the Lynda.com acquisition represents nearly triple what LinkedIn has paid for every other acquisition it has made. What makes Lynda.com so worthwhile for LinkedIn?
Lynda.com is an education company specializing in training videos for business, software, technology and other skills. The company was founded in 1995 by Lynda Weinman, an expert in the special effects animation industry. Originally, the company was set up to support the classes Weinman taught at the digital arts school she founded with her husband. By 2002, Lynda.com had over 100 videos online; today they offer over 5,700 courses and 255,000 video tutorials. The company had raised some significant financing in the years before being acquired by LinkedIn—in 2013 they received over $100 million from a venture capital firm, and in early 2015 they received another $186 million in cash investments. In 2013, Lynda.com bought video2brain, an Australian-based company that provided similar training videos for web design and programming.
Lynda.com’s training videos are popular with businesses seeking a simple and effective way to train multiple employees at once. All of the videos are taught by respected experts in their fields. They use a subscription-based model to grant access to their training materials for individuals, corporations, academic institutions and government clients. With the huge rise in the popularity of video content across the web, buying the most respected video training provider makes sense for the hugely popular LinkedIn.
LinkedIn was founded in 2002 and went online in early 2003. Only six years later, the networking service boasted more than 20 million members. Today, LinkedIn claims to have nearly 260 million members in over 200 countries and territories around the world. The website is now available in 20 languages. At its most basic, LinkedIn is a platform that allows users to post their resume and skillsets to allow employers and colleagues to connect with them. But the network also offers users the opportunity to endorse the skills of people they know as well as post to their own page and comment on articles about their industry. Premium memberships give recruiters and job seekers even more options to stand apart from the pack.
Will a LinkedIn premium membership soon include access to training videos from Lynda.com? It would make sense if LinkedIn opened the gates to at least some of the training videos offered by Lynda.com. This would be a huge incentive for free members to upgrade to the premium option while giving premium members a reason to stay. LinkedIn sees its value not just as a resume-posting board, but a useful tool for job seekers to truly increase their worth and chances of finding their dream job. If the company can market itself as a source for showing off the skills you have while providing training for new skills that will help you get ahead, their value to members is increased exponentially. This philosophy is in line with a statement made by CEO Jeff Weiner the day before the acquisition of Lynda.com. Says Weiner, “When I look at Lynda.com’s platform, I see a best-in-class collection of high-quality, premium content that is focused on professional skills — hundreds of thousands of videos, comprising thousands of full courses — that make it possible for anybody to easily and effectively acquire a skill needed to get their first job, get a promotion, land a business deal or advance their career.”
It’s true that Lynda.com’s content is known as some of the best in the online education industry. While there are plenty of places to find tutorial videos on the web—including many for free—Lynda.com has been producing videos for longer than the vast majority of them. The high quality of Lynda.com’s videos is unquestionable, as well. There is an intensive vetting process for any expert who wants to make a video. Even those experts who are initially approached by Lynda.com need to go through an audition process before they are selected to lead a course or video tutorial. And then there is the high production value Lynda.com videos are known for. Many of the people behind the camera producing the videos have backgrounds in the entertainment industry, and the production studios at Lynda.com are nothing short of Hollywood quality.
So now Lynda.com will likely provide LinkedIn members with quality content that they will actually find useful whether they are searching for a new job or just trying to hone their skills to be better at their current position. But there is another reason that makes this acquisition even more beneficial for LinkedIn: college students. According to Re/code, Lynda.com is pretty well integrated into the college world, working with 40 percent of higher learning institutions in the U.S., including all of the Ivy League schools. Courting college students to join LinkedIn is a huge priority for the company, since virtually all college graduates are going to become job seekers. Lynda.com could be the foot that LinkedIn needs in the doors of brick-and-mortar college classrooms.
Finally, let’s not forget about the data. Acquisitions come with loyal clients, and those loyal clients bring their personal data along with them. As Alex Kantrowitz points out in AdAge, LinkedIn can leverage that personal data into huge revenue via its advertisers. “Lynda's data is a goldmine for some advertisers,” Kantrowitz writes. “Adobe would probably love to get ads for its Creative Suite in front Lynda's design students.” And while they’re at it, why not let paying recruiters know which people have recently completed Lynda.com training videos that match the requirements for posted jobs? This would be a great way for employers to weed out the over-inflated resumes from the truly qualified candidates.
The Lynda.com acquisition increases value to its different members in unique but concrete ways. By 1) showing job seekers what skills they need, then 2) providing training to acquire those skills and finally 3) letting employers know who has those qualifications, LinkedIn will become indispensable for employees and employers alike.
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