LinkedIn has hit the acquisition trail again, but this time at serious scale, paying $1.5bn for online education business Lynda.com, its largest acquisition to date and the fourth largest deal in social media history.
Big bickies. And a big statement of intent. LinkedIn is moving directly into the online learning space to extend and deepen its relationship with business executives via an expanded spectrum of services.
I wrote recently about LinkedIn’s evolution from a recruitment related business to the world’s leading B2B content distribution, marketing and networking platform. Its previous acquisitions had made strategic sense and the Lynda.com acquisition is no exception.
Lynda.com is a leading online learning company teaching business, technology and creative skills to help people achieve their professional goals. It has an extensive library of premium video content, spanning hundreds of thousands of videos on a diverse set of professional topics across multiple languages.
The synergies seem obvious and significant. LinkedIn already knows more about your professional life than anyone else. It also has big data showing the types of training and education people have done and how that has impacted their careers. There is no better organisation to target specific online education offerings to a targeted professional audience.
Expect to see ads telling you not only “people in your sector studied [x] diploma” but also “62% of CxOs have completed [presentation skills] training. Here’s a course that may help you progress”. Or “You last did Photoshop training in  – try this diploma to brush up on your skills”. Plus of course raw facts and insights about the training and diplomas required to secure certain career paths.
The sheer scale of LinkedIn on its own brings a key benefit to the Lynda.com distribution capability. Even absent the smart, big-data driven targeting that will come, simply embedding the offering into a platform with almost 350m members will drive growth.
Of course the acquisition of Lynda.com and the expanded data pool LinkedIn will now capture about its users in itself increases its big data capability and further deepens its understanding of its user base. This is valuable across LinkedIn’s entire product range and also enhances its own Economic Graph project which is attempting to “Digitally map the global economy to connect talent with opportunity at massive scale”.
From a macro market perspective, online education is a massive growth opportunity and LinkedIn has secured one of the market leaders. Quite an entrance to a new market sector. In an era of rapid change and disruption to the business world, the need to “always be learning” has never been greater. Forecast to be worth $107bn in 2015, LinkedIn will now be tapping into this growing demand for quality, online education. Even the Whitehouse is jumping on this bandwagon with its recent TechHire initiative, designed to empower Americans with the skills they need.
Strategically, with this acquisition LinkedIn has sensibly stayed very much within its core specialty by broadening its professional development capability and overall value proposition for the world’s executives. Online education provides a synergistic service to offer to its members and relevant additional content to share and distribute. LinkedIn has a good track record for quickly absorbing acquisitions into its core platform, and if done right here, there will be synergistic benefits with other aspects of LinkedIn (recruitment targeting, content, recommendations, skills, endorsements, Slideshare etc).
The price paid – stated to be 10 times revenue – is somewhat eye-popping. Yes it’s a big valuation, no question. But Facebook’s $1bn price for Instagram seemed a lot at the time too (it was recently valued at around $35bn by an analyst). Finance theory dictates that the acquirer that can reap the most benefits should logically be able to pay the most. LinkedIn certainly fits that bill in this case.
This deal makes sense for both parties. As Jeff Weiner, LinkedIn CEO said “Both companies seek to help professionals be better at what they do”.
Time will tell whether the value was bubble-like or ‘bargain of the century’, but from a strategic perceptive it’s another great deal for LinkedIn. Staying focused on its specialised area and bolting on another sensible tangential offering, LinkedIn has further cemented itself as the clear market leader in the B2B social network space.