Facebook Could Explode After this Move
Andrés is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Facebook (NASDAQ: FB) is in a very particular position, the company has a tremendous potential coming from its more than 900 million users who engage very actively in the platform. But the company founded by Zuckerberg has still not found a convincing business model, at least not one convincing enough to justify its lofty valuation. Its next move into the jobs business may be precisely what the company needs to unlock its economic power and become a true high growth powerhouse.
The online jobs business is big and promising, LinkedIn (NYSE: LNKD) made more than 50% of its revenues from that business in 2011, and the figure represented an extraordinary 156% increase in comparison to the previous year. LinkedIn has found a very intelligent strategy to monetize the power of social networks, it’s not an online CV company, it’s an online platform where people build their professional and business profile.
With more than 100 million users, it has become a contact database of enormous value. That´s a main advantage versus potential competitors like Monster Worldwide (NYSE: MWW) and Dice Holdings (NYSE: DHX). LinkedIn is a complete social network instead of a jobs board. Monster and Dice can help those in search for employment, but LinkedIn is the place where you have to be present, even if not actively looking for job opportunities.
Being much bigger and more social, Facebook has the potential to build its job search functionalities into a very successful business. For this reason, the company´s current project to build a job board, as reported by Dow Jones Newswires’s Joseph Walker, could become a tremendous boost to its shares if it succeeds in becoming a competitive alternative to LinkedIn.
Facebook has a problem though, it exposes too much personal information. Most people don´t want the pictures from that crazy party available for everyone to see: potential employers, superiors at work or business clients. People want to keep their professional profile separated from other social networking activities, and that´s one of the main reasons why LinkedIn has become a successful alternative to Facebook in job search.
But the matter of differentiating professional profiles from other activities is not technological, Google (NASDAQ: GOOG) has done a terrific job with Google+ when it comes to privacy issues, making it very easy for users to keep certain information and publications available for particular circles. If people have different social circles: work, old time friends, or people who share the same sports interests, it makes sense to be able to share certain information with each circle.
Actually, Facebook has built its “lists” following the same concept as the “circles” from Google+. It is quite easy to select privacy settings in Facebook, but most users just don´t use this functionality so much. Facebook users are accustomed to assuming all their information in the social network is available to each and every contact, and that´s a big drawback when it comes to using Facebook for professional activities.
Perhaps it would be smart for Facebook to build a professional network inside its existing social network, so people would have to choose what particular information they share in their professional profile instead of having to select privacy considerations for each piece of personal information they have in Facebook. This would be an interesting way to leverage its gigantic user base, and build a job search business without forcing users to mix their personal and professional profiles.
It remains to be seen if Zuckerberg and his team can deliver an attractive proposition with the coming job board, but investors should pay close attention to this new project. It could be a great way for Facebook to transform itself from a big social network into a successful and growing company with a proven business model.
acardenal has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook, Google, and LinkedIn. Motley Fool newsletter services recommend Google and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.