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LinkedIn LearningTo the Board of LinkedIn

From Nanyang Consulting

Nanyang Business SchoolDeeksha Bajaj

Bohao ZouZeeshan AshrafWendell Shirley

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Agenda• Problem Statement• Analysis• Recommendations• Evaluation of Alternatives• Implementation for

oBuild LinkedIn CommunityoLaunch LinkedIn DevelopmentoAdopt flexible pricing strategy

• Balanced Scorecard• Financial Management• Implementation Timeline• Risk Mitigation• Key Takeaways

2

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Problem Statement

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• Intense market competition (e.g. Khan academy)• Process to monetize Linkedin Learning• Integration with the Linkedin platform

• Net losses in 2015• High interest expenses• 60% of the members are passive job seekers

How will LinkedIn disrupt the professional training market? How to promote, integrate and monetize Lynda (now LinkedIn Learning) ?

Internal issues

Related to integration of Lynda

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Analysis – Competitive Landscape

4

Product differentiation required to expand the reach of LinkedIn Learning/ Lynda

High ValueLow Value

High Quality

Low Quality

Lynda

Online search portals

Youtube

KHAN Academy MOOCs

Coursera

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Analysis – Existing Customer Base

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LinkedIn has relationships with companies using its network to find potential employees

TALENT SOLUTIONS

(e.g. LinkedIn corporate and LinkedIn job postings)

MARKETING SOLUTIONS

(e.g. Display advertisements)

PREMIUM SUBSCRIPTIONS

(e.g. sales navigator and individual subscriptions)

LinkedIn PRODUCT PORTFOLIO

64% 19% 17%

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Recommendations

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Build LinkedIn Community1

Launch LinkedIn Development for corporate learning2

Adopt flexible pricing strategy3

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Evaluation of Alternatives

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MarketPotential Costs Existing

Infrastructure Overall

Build LinkedIn Community

Offering license renewal programs for professionalsAdopt flexible pricing strategy

Offering free courses to all LinkedIn membersProvide professional certifications such as OracleDisinvestment in Lynda - -

Launch LinkedIn Development for corporate learning

Favorable Unfavorable

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Build LinkedIn Community

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Build LinkedIn Community

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Build a mentorship platform to engage LinkedIn members

Recruiting & Professional Network

Self e-Learning Platform

GAP

Mentorship & Community

MentorsExperienced industry experts (reduce potential conflicts of interest)

1

MentorshipWeekly 20-minute virtual meetings (using Skype)

2

CommunityGroup by industry or by mentor (30 mentee maximum)

3

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Build LinkedIn Community

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Target a berth of member segments across the globe

TargetUniversity students at $19.90/month

Professionals at $39.90/month

*price examples

Location US, UK, Canada, Singapore – Supergroup of shared language usersIndia, China – Largest potential learning members

Marketing1. LinkedIn and LinkedIn Learning website

2. Skype advertising3. LinkedIn Members who are using other mentoring websites

Technology Leverage Skype Translation technology to expand global reach

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Build LinkedIn Community

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Capitalize on the synergies between disparate businesses and benefit current members

Benefits

Create a professional learning community whichfills the gap between LinkedIn and LinkedIn Learning

1

Increase the usage time and loyalty of LinkedIn members2

Generate new revenue streams for unengaged members

3

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Launch LinkedIn Development for Corporate Learning

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Launch LinkedIn Development

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Improve corporate personal learning development experience

• Provide personalized learning development program for MNCs• Example - Deloitte

OBJECTIVE

Employee profile

PRODUCT

Job demand

Data Analytics Select the experts to design courses

Personalized learning

development

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Launch LinkedIn Development

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Target HR and Learning and Development teams in headquarters of MNCs

• MNCs – HR and Learning and Development teams

TARGET

• Pilot in US, UK and Canada

LOCATION

• Targeted promotion to LinkedIn Talent Solution members• Key account managers in developing countries

MARKETING

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Launch LinkedIn Development

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Disrupt corporate learning development market

• Leverage and enhance existing data analytics capacity

BENEFITS1

• First mover in the new market2

• Sustainable revenue source3

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Adopt Flexible Pricing Strategy

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Adopt Flexible Pricing Strategy

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Introduce ala carte deals with value-based pricing and accreditation

Recruiters Members

LinkedIn Learn

Challenges• No formal accreditation• Poor completion rates• Unclear real value

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Adopt Flexible Pricing Strategy

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Target new customer segments using new pricing strategy

Bundled Unbundled

Bundled

Unbundled

PRODUCT

PRICE

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Adopt Flexible Pricing Strategy

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Integrate LinkedIn application with Lynda to personalize training suggestions

• Implement ala carte deals for all members

• Use a multi-tier pricing strategy for the courses based on demand, course topic and geographies starting USD 9.9 per course

• Get certificates accredited from universities such as Pearson

• Effectively use data analytics to suggest courses for the job

LAUNCH PLAN

ZeeshanConsultant, Nanyang Consulting

SkillsExcel, Communication, Leadership

Trainings RequiredDigital AdvertisingFintech

USD 10USD 15

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Balanced Scorecard

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Balanced Scorecard

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Learning & Development Internal

• Time required to train key account managers

• Investment required existing IT infrastructure

• Time required to set up mentorship and community management teams

• Time required data analytics capacity for personalized courses

Customer Financial

• Enrollment in courses• Active time of customers• Retention rate of LinkedIn Learning

• Profitability of new offers• Return on investment

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Financials, Implementation, Risk Mitigation

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Financial Management

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LinkedIn has high operational costs that are leaving it at a net loss

AssumptionsRevenue CAGR 48%WACC 10%Enterprise Value Multiplier 25

Net Investment 5%Debt/Equity Ratio 0.11Price/Share $100

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Financial Management

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Through new product development and market penetration triple current market cap in 5 years

(USD, Millions) 2015 2016 2017 2018 2019 2020 2021Net Revenue 2990.911 4037.73 5957.67 8790.543 12970.45 19137.89 28237.96Cost of Revenue -418.858 -586.401 -820.962 -1149.35 -1609.08 -2252.72 -3153.81Gross Revenue 2572.053 3451.329 5136.709 7641.196 11361.36 16885.17 25084.15Sales and Marketing -1048.13 -1414.97 -2122.46 -3183.69 -4775.54 -7163.31 -10745Product Development -775.66 -1047.14 -1466 -2052.4 -2873.35 -4022.7 -5631.78General and Administrative -478.734 -646.291 -872.493 -1177.87 -1590.12 -2146.66 -2897.99Depreciation and Amoritization -420.472 -567.637 -766.31 -1034.52 -1396.6 -1885.41 -2545.3Other Income -63.788 -86.1138 -77.5024 -69.7522 -62.777 -56.4993 -50.8493Operating Income -214.73 -310.828 -168.055 122.972 662.9728 1610.601 3213.275Taxes -49.969 -72.3317 -38.6527 28.28355 152.4838 370.4383 739.0533Net Income -164.761 -238.497 -129.403 94.68842 510.4891 1240.163 2474.222Net Investment -149.546 -201.886 -297.884 -439.527 -648.522 -956.895 -1411.9Change in Working Capital -100 -147.55 -217.71 -321.231 -473.977 -699.352 -1031.89Free Cash Flow -414.307 -587.933 -644.996 -666.07 -612.01 -416.084 30.42933

Terminal FCF $30M Equity $760M Market Capitalization $76B

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Implementation Timeline

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$810M cost is the NPV of costs expensed over a 2 year implementation period

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Cost (USD)LinkedIn CommunityWebsite Development $20MAdvertising to acquire mentors $100MLinkedIn DevelopmentBuild out Demand Data Analytics $50MContract expert course designers $120MPort of Lynda Technology Platform $80MSales Consultant Training $200MLaunch Flexible Pricing StrategyMarketing of a-la-carte pricing $150MSecure course accredidation $90M

$810M

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Risk Mitigation

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Identified Risk

Cannibalization of existing subscription pricing by a-la-carte deals

Proposed Mitigation

Target passive customers for a-la-carte deals

Short lifecycle of mentor relationships Continuous feedback loop from members through customer service teams

Potential economic downturn may affect memberships

Make LinkedIn Learning an integrated part of the job-seeking platform

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Key Takeaways

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How can LinkedIn create synergies between LinkedIn and Lynda (now LinkedIn learning)? How to promote, integrate and monetize Lynda?

Build LinkedIn Community

Launch LinkedIn Development for corporate learning

Adopt flexible pricing strategy

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Questions?