Microsoft Corporation (NASDAQ:MSFT) Barclays 2022 Global Technology, Media and Telecommunications Conference December 7, 2022 1:25 PM ET
Company Participants
Ryan Roslansky – CEO, LinkedIn
Conference Call Participants
Raimo Lenschow – Barclays
Raimo Lenschow
Good. Okay, let’s start. Hey, welcome to our next session. I’m really happy. I feel like now an internet guy because like now we’re talking about LinkedIn and kind of proper, a good kind of assets that are kind of dealing in the social world. And so if some of my questions feel like this is the software guy asking silly questions so I apologize in advance.
Ryan Roslansky
I just won’t answer.
Raimo Lenschow
Yes, Ryan, like, since this is the first time, no, it’s been a while since we’re out on the conference circuit. And a lot of things have changed, you became the CEO during the pandemic, like, maybe introduce yourself a little bit first, and then kind of we go deeper into questions.
Ryan Roslansky
Yes, thanks for again, for having me. My name is Ryan Roslansky, CEO of LinkedIn, I’ve been the CEO for the last since February 2000, which was a great time to, 2020 was great time to become a CEO of any company, obviously. I’ve been at LinkedIn before that for about 14 total years now. Worked across the product org in literally every single part of LinkedIn business, we run a social network in the core. And we have five distinct business lines that cross around that social network. And I’ve had the pleasure of working on or starting every single one of them. So it’s an honor to be here today with you.
Question-and-Answer Session
Operator
[Operator Instructions]
Raimo Lenschow
Oh, right. Okay, perfect. So if you think about the last few years were like, very fascinating and kind of positive and negative way in terms of how the world has changed, and how work has changed as well. And kind of from a LinkedIn perspective, like what stood out for you in terms of the changes that are kind of happening, like happened? And well let’s start at that as a very open question.
Ryan Roslansky
Yes, I mean, one of the really unique things about LinkedIn is at the core. I mean, we’re kind of a massive social graph. And that graph has a variety of components nearly 900 million professionals, roughly 50 million companies that have an active presence on the platform, at any given time, those companies are posting in between 14 to 16 million job openings. There’s north of 100,000 schools that have an active presence on LinkedIn. We’re the only western network that operates in China. So we have a real global view on what’s happening. And the connections between all those entities we just talked about, the graph updates, roughly 5 million times per minute, in terms of the connections between those entities and what’s going on, so it’s a really unique view, real time view, and what’s happening across the global labor market, can tell you which industry is going to be hot, three months from now. What companies are about to go out of business, where skill gaps truly exist across the world. So it’s just a really unique view, kind of in the real time labor market, we actually work now with a lot of the governments across the world to help provide them with more, what I’ll call real time and accurate data about what’s happening in their labor markets. Because we just have that that view. So I mean, there’s been a lot of tremendous insights over the past couple of years, one that we paid a lot of attention to, which I think everyone felt and talked about was, there’s a stat that I look at pretty frequently, which is, we call it position changes, it’s basically someone changes their profile from going in a position at one company to position to another company, it’s that simple. And, historically, the year-over-year like deviance in that metric is literally like negative one to like plus 1%, that stays pretty constant in terms of the percentage of narrow base, that’s changing jobs. When COVID hit that number dropped to drop to like negative 20%, which makes sense, people were sheltering in place to try and figure out what they want to do with their life or write up the uncertainty and then ever skyrocketed.
And this is what people have called the great reshuffle or the great resignation. But my goodness, like the number of people that were changing jobs on LinkedIn back a year and a half ago was, it was unreal to watch. I mean, north of 100% year over two years on the movement, and it was just — it was crazy to watch kind of the movement in general. But what was really interesting is if you break down into the kind of that reshuffled data by generation baby boomers, they really weren’t moving at all to be honest. Then as you kind of keep going up the kind of generational spectrum people are moving more frequent. And then you get to like Gen X. And I mean, this is a group that’s moving like north of 300%, like through the great reshuffling. In fact, it’s still, right now it’s all kind of elevated back down into that like negative 1% range again, it feels back to normal, but Gen Z is still moving north of 30%. And I think this is a generation, it just feels like you’re supposed to move jobs frequently, or that’s how the world works. And it’s a, I think looking out, it’s really a generation that’s going to need to be heavily inspired and motivated. And companies are going to have to figure that out. So I think that’s one thing we pay attention to. On the job side has something fascinating right now that I look a lot at is pre pandemic, about 1% of all jobs posted on LinkedIn were remote. As of today, that number is about 14%. And so we’ve seen a huge jump in the number of jobs that are remote. But that’s not the fascinating part. What’s fascinating is north of 50% of all job applications on a daily basis on LinkedIn, go to that 14% of remote jobs. So there’s huge demand still, at least on the labor side for remote work. And then actually something we were just looking at this morning walking over is what kind of tracking where people who are moving, physically moving locations for jobs. And I don’t know, I mean, I don’t know if you were to call it, I probably would have called it a few years ago. But right now the three biggest markets, people are moving to physically moving to New York, San Francisco and Seattle, there’s like this move back to the cities. And I mean, there’s real movement right now. So I know there’s a couple of things that I’m paying attention to.
Raimo Lenschow
Yes, that’s interesting. Do you think that the Gen Z, or like let’s call it the younger generation, do you think that’s a permanent thing? Or is it like, because like the discussion, we have it as well as is like, because they were younger there’s a whole new world of feeling differently about work, et cetera? Do you think they will eventually get old and settle down like the rest of us? Or do you think it’s a permanent change to what’s going on –
Ryan Roslansky
I haven’t seen anything in the data that would suggest slowing down. In fact, it’s starting to the frequency with which they’re changing jobs is actually increasing. And it’s starting to really deviate even from millennials. So I think it’s, who knows, I wish I had a crystal ball on that. But at least it’s kind of the new way of work. And it’s not just moving jobs, but it’s kind of having the side gig. Maintain actually a couple of side gigs along with your core jobs. So we’ll see.
Raimo Lenschow
Yes. And is that something that is heavily US like, Is it global?
Ryan Roslansky
It’s global, yes. It’s a great question. It’s a global phenomenon. I mean, it index is higher in the US, but it’s happening globally.
Raimo Lenschow
Yes, that’s amazing. Okay, yes. Okay. Germans don’t stay in that job anymore. What’s going on? Like, another thing that’s interesting is, it’s kind of if you think about skills, and degrees and pedigrees where people are coming in, like, what do you see there in terms of the future of talent? Or do you see any trends playing out there? And like, and also like, how does LinkedIn learning play in there to help that bridge the gap there for some?
Ryan Roslansky
Yes, I mean, I think be it due to COVID, or digital transformation, or I mean, a fourth industrial revolution. Jobs are being created and displaced right now at a record rate. And historically, what we, I mean, all of us in this room, and the world has used to assess talent are things like, where did this person go to school? Or what was their previous company? Or do they know someone that I know? And I think that’s fine when the markets moving slower, but at the pace is moving now that’s actually the world needs more flexible and alternative and always on mechanisms to assess talent. And my perspective is that’s going to come through kind of a skills-based approach. It’s those other things are actually really valuable. But it’s most importantly, like, what does this person know how to do? Or what can we be trained on what to do? Kind of skills being the center currency and think about it, we’re doing across LinkedIn. I mean every minute, we’re just basically trying to, we’re trying to match like this person over here with this job over here, like do these two things match up because ultimately, how we drive value back on LinkedIn is if someone hires someone else, and when you look at skills is kind of the centerpiece of that matching algorithm.
You’re able to find much better, wider talent pool, it’s a much more efficient and a much more equitable talent markets, we’ve been pushing a lot on this and the technology’s there, I think it’s a mindset shift, and a lot of folks have to go through. But here’s a really, here’s like one of the best recent examples to showcase how this can be done better. So through the pandemic, and they then it starts on LinkedIn, you see all these food service workers, like become unemployed, which makes sense, people aren’t going to restaurants, like you don’t have a job. On the flip side, the highest most in demand job being posted on LinkedIn, early pandemic was digital, like customer service agent, which makes sense because it means moving online, you need people to help service all this. And you look at the group of the food service workers, and on average, they have 70% of the skills that you need for these entry level digital customer service jobs, literally 70% like, pretty much almost there. But the folks doing the hiring aren’t looking at that talent pool, the folks in that talent pool, have no idea that like, there’s real opportunity here. So these two things go, like in an inefficient way not being matched. And again, like we drive value by matching these two things together. So I mean, we see this happening all over the world right now. But I think that the more that we can start to focus on skills to be the currency, it’s going to help to make that a more efficient labor market, which is great for our business, but also great for the world as well.
Raimo Lenschow
Yes, okay, perfect. And then the, for a lot of us, like more on the software world we kind of we know LinkedIn as a great platform to kind of connect people like this is people, the [inaudible]. Like, can you talk a little bit about like, you talked about your five pillars of work there? Like, how do we evolve from that? Like, what are you using that kind of base information world can help to work with people and give them special offerings?
Ryan Roslansky
Yes, I mean we’re called the job site, we’re called the social network. Fundamentally, the vision for what I’m trying to create is that we’re a platform that exists to create economic opportunity, and right now, really focused on three marketplaces. So first and foremost, the exchange of knowledge between professionals, either in paid form through LinkedIn learning, or just through kind of our core sharing and feed products. We, about a year ago, released a newsletter product that allows professionals or publishers or companies to create a newsletter, you’ve heard a lot of other companies that do this as well. A year later, we have 150 million subscribers to these newsletters, it’s a really valuable way to disseminate and share professional knowledge and information. And we’re just keeping kind of building features like this, because at the core, we believe that we can help it’s good for our business, and it’s valuable for the world, if we can help kind of the free-flowing exchange of knowledge between professionals, that’s kind of the core thing that sits at the center of LinkedIn. And there’s two more marketplaces that run through and on top of that, versus a talent marketplace just constantly connecting people with jobs, either through passive recruiting, or through active job seeking roughly 10 people per minute will start a job, literally start a job that was found through LinkedIn. And we’re just moving much more aggressively internationally into kind of the first line of frontline segments as well. So we’re just trying to expand that marketplace to again, help connect anyone in the world looking for opportunity we then we’re looking to hire them, be it full time, freelance gig, et cetera. And then on top of that, we call, we have what we call the products and services marketplace, where we’re trying to ultimately connect potential buyers or active buyers with sellers or marketers, obviously, in a b2b context. And probably the largest Tam, actually, for us is in that marketplace. We do it through a product called Sales Navigator than our obviously our advertising products, which have really kind of shown a lot of strength over the last couple of years. So that’s the framing which we look at it but ultimately, what we’re trying to do across the board is to basically connect two people like someone sharing knowledge, someone seeking knowledge, someone looking to hire, someone looking for a job, someone looking to buy with someone looking to sell or market to and like that framing, I think is what’s been really valuable to help us grow over the last couple years.
Raimo Lenschow
And then because we’re the financial guys here, like I am just trying to kind of how does that link in like, if you think about that evolution of the platform and the opportunities, that kind of platform then provides to do more stuff. Like how do you think about like, oh, I want to do more on Sales Navigator because I’m kind of making more money there or like, how do you think about growing the business and where do you think you will come in on.
Ryan Roslansky
Well, I mean, the good thing about it is, it’s a very diversified business. So I mean, obviously we are inside of Microsoft and very grateful to be kind of inside of Microsoft umbrella. But if you look at the past the kind of the trailing four quarters, that kind of Amy Hood, the CFO of Microsoft has talked about LinkedIn, we’re doing north of $14 billion in revenue growing at 28%. And it’s because of this diversified set of businesses. We, all of it really kind of goes back to how do we effectively be connecting people against these value propositions that I just talked about. And LinkedIn has become much more mainstream as a knowledge marketplace, we’ve seen just engagement soar over the past couple of years. And that engagement with the valuable profile data that exists on LinkedIn is kind of the core thing that helps to power all of those businesses.
Raimo Lenschow
Yes. Okay. And then I want to switch gears a little bit like if you think to the consumer driven like, Internet giants, they have like a different world, there’s, they’re very more heavily dependent on the advertising spending and stuff like that. What, you’re more in the business world, like, what are you seeing on the net aspect?
Ryan Roslansky
Yes, I mean, when I joined LinkedIn, 14 years ago, I had the pleasure of starting our advertising business, and at the time, we were kind of a job site. And it was like, why would anyone use LinkedIn to advertise. But what’s so valuable about LinkedIn for is that we’re focused on b2b advertisers, like, that’s kind of our sweet spot. Literally, if you’re looking to sell a high end b2b product, and you know the buying group is a CFO and someone in finance and like someone in HR, we can literally, like put ads in front of those specific people on LinkedIn, because the first party data is so strong, people keep their LinkedIn profile up to date, because their professional profile records the resume online. So our ability to target ads against that first party data on LinkedIn is really strong. I think the context is really helpful for us as well. People want to have their ads around professional content, especially in the b2b space. So I think that helps us a lot there. And in general, and the more that we get people using LinkedIn, the more we get them using our feed, and sharing knowledge just creates great inventory for us. So pretty bullish in long term in general, for our advertising business. And again, the connection to Sales Navigator, because a lot of these are just, lot of these address generating leads to go into salespeople to help them understand how to better connect and sell to those people. So there’s just a really valuable b2b market there, I think, in general the drivers of an advertising business, you obviously have unique engagement on one side, and then you advertise on the other side, and we’re seeing both of those still relatively strong. I mean, the engagement side is really strong. And we’re seeing advertisers still coming to LinkedIn, I just think like the rest of the world, we’re seeing them, their budgets pulled back a little bit, so willing to be spending less on kind of a per click or per lead basis right now. So still bullish about that business. I think we’re going through a cycle right now; I think the b2b context in differentiation helps us a little bit, but we’re not immune to what’s happening currently.
Raimo Lenschow
I mean, from your experience from previous cycles, or when you saw, what saw pandemic or ’08, ’09, et cetera, while ’08, ‘09 maybe too early, like the, you kind of, in a way with that and cyclical but like less in terms of magnitude cyclical compared to like the consumer price. So how would you kind of characterize it?
Ryan Roslansky
It’s interesting, because what happens on LinkedIn to your earlier point about the diverse business lines, what happens to LinkedIn, in a cycle, we see just a huge wave of engagement through job seeking, a lot of people are looking for jobs, we see a lot of engagement in our kind of our paid learning products, because people who are looking for jobs or kind of back to my skill point or trying to upskill themselves to the jobs that exist and try and pick up and learn new skills. And so again, kind of the dynamics of an ad market are engagement and then advertiser demand, and both of these things can kind of go in different ways. Right now we see the engagement side, just really kind of pick up and the advertising side is still there. It’s just a little bit muted to where it was probably a year ago, which I think is probably right.
Raimo Lenschow
Okay. Then I wanted to switch gears a little bit like you have now what 875 million members. And if you think about the growth opportunity there. I mean, it’s already like a very big number. How should we think about that number going forward? And where do you see opportunities? I’m thinking maybe international more, et cetera, like, but like, I’ll let you speak to it.
Ryan Roslansky
There’s 835 million members on LinkedIn, we’re growing right now. There are three members that join LinkedIn every second and 35% of those members are kind of frontline right now, which is different. Two thirds of those members are outside of the US, a lot of strength right now in Asia Pacific, a ton of strength right now in India, we’re nearing 100 million members, right now in India, these members are over indexing on everything that you need for our economy to move forward. So networking and job seeking and learning is something really unique and special right now, I feel like it’s happening in India.
In LinkedIn grows, we don’t spend money to acquire users, it grows, it’s a network. So people join LinkedIn, they upload their address book, and whoever’s in their address book gets invited to join LinkedIn along with him. So the network kind of grows in these organic ways, along with kind of where the pockets of growth are happening right now. So my, the vision of the company is to help everyone in the world on economic opportunity. So I think that hopefully, that’s where we aspire to be. But I think we’re seeing accelerated member growth right now. And it’s especially coming internationally, India, Southeast Asia, Brazil, and more than we have ever seen before, kind of in the frontline sectors.
Raimo Lenschow
Yes, that was actually my next question on the frontline doesn’t strike me from the outset as like LinkedIn, like, initially, at least initially think like, because it’s more of like, the office workers kind of networking, et cetera. Like, how does that fit in there? But and the question is, actually, what was my, why did the frontline workers not kind of, why are they only discovering it now?
Ryan Roslansky
I think they’re discovering it now, because of what I just explained, which is, again, people discover LinkedIn, because someone in their address book or that they know, connects, or ask them to join LinkedIn. So you get these pockets, and then that growth kind of happens, right, which is one of the beautiful things about kind of these social growth products is how they grow on their own. But we’ve never really had on the recruiting side a lot of companies who were coming in posting kind of frontline jobs on LinkedIn. So there was no reason for people to kind of join in the first place. Now that’s starting to change, companies are posting all their jobs on LinkedIn, company like Amazon will just literally post every single one of their jobs, no matter where it is in the company on LinkedIn. When that happens, it brings those people onto LinkedIn, because maybe they’ll find the job through SEO, et cetera. They joined LinkedIn, they invite their people that they know in their connection to join LinkedIn, then that just kind of starts a cycle there. So that’s where a lot of that growth right now is coming from, then the great thing for us is that when you start to see a lot of these folks joining LinkedIn, allows our sales team to go out to find new customers saying, hey, these folks are on LinkedIn, the folks you’re trying to target and for us to kind of open up that level of business. So as we kind of balance the marketplace.
Raimo Lenschow
Yes. Okay. Next question I wanted to ask, it’s like, you mentioned earlier that Microsoft relationship and how much you enjoying it, like, what’s the, how do you have to think about that what Microsoft brings to the table, like you were in LinkedIn before, you were part of Microsoft, like, talk us through, like, how they are helping or what’s different.
Ryan Roslansky
I mean I think we’re nearly six years past the date of this acquisition, we were doing roughly, I think, $2 billion something dollars in revenue at the time of the acquisition, we just crossed $14 billion the businesses nearly quadrupled. The member base has doubled engagement, 2x or 3x what it was. I don’t know, I think looking back, this will be thought of as one of the much more successful acquisitions in technology. A decade in I just think Satya Nadella had this super intelligent vision understanding of how, if you can let a company, think long term, if you can let a company have access to next levels of technology, you can unleash a ton of value. And that’s exactly what’s happened. LinkedIn is completely standalone, completely standalone inside of Microsoft still, I mean, six years in and look when you see the success that we’re having it makes sense. If we need access to technology, I mean a lot of the AI stuff that you’re going to see coming up my goodness if we were standalone company, we wouldn’t have access to the same stuff we do through Microsoft, access to distribution partnerships, is unique access to some go to market stuff when we think it makes sense. But most importantly when you’re not a standalone, smaller public company trying to make sure that every quarter you’re thinking about some short-term things to eke out something that you need for to meet that quarter, and you can think longer term. It’s amazing. And that’s exactly what’s happened with LinkedIn and Microsoft. So I love it, I get to sit in a weekly staff meeting with people like Satya Nadella and Amy Hood and Brad Smith. And then my goodness, like learn from the greatest leaders in technology. So it helps me then I can take that back and help grow LinkedIn. So I think it’s a just I think Satya has written a book on how to do a successful acquisition like this. It’s really exciting so.
Raimo Lenschow
And if you look at other deals in tech, usually what you do see is like the mothership take something over doesn’t really understand it. And Nadella was few now, like so for Microsoft taking over, like in more internet focused company, the founder leaves, like, within a year after the contract really goes away. But you’re only now took over and you’ve been there for 14 years, like what, like, if they’re, like, usually, then there is cost cutting coming in, it’s a lay-up, but it does look like this is all very different. Like, it’s —
Ryan Roslansky
Yes, look, every acquisition is different in terms of what you’re trying to accomplish. I think the thesis the Satya probably had was like, hey, LinkedIn, if put in the proper environment can accelerate growth, and LinkedIn with access to the right technology, the access to the right distribution partnerships, can accelerate growth. But LinkedIn, it’s not like something’s broken. It’s not like, it’s not even like there’s this obvious like, technology overlap. But if Microsoft owns this asset, we can absolutely accelerate the growth. And that’s the thesis, the different thesis in some acquisitions, but I think it was, I mean, it’s played out to be spot on. I mean, we decided 2.5 years ago, to start building a much more, we started at pandemic, obviously, people can’t get together for events like this. So events are moving online. And like my goodness, like, LinkedIn has got to be the place for people and professional events. And that real time like video technology, if we were some standalone companies trying to figure that out, it would have taken us years to figure out. But when it’s like, here’s an API to the team’s framework, we can launch like an event, real time events product in like a month. I mean, it’s unbelievable. It just gives us such an advantage to be able to grow LinkedIn. So I see your point. I think every acquisition works like that. I think other acquisitions have different thesis. But this one to kind of be standalone and let LinkedIn grow is paid off really well so.
Raimo Lenschow
Yes. Okay. And then I’ve only got time for one more question, Ryan, like, but I can’t let you go without asking the more the question that probably everyone in the room was kind of thinking, since you have the graph, like, what are you seeing at the moment in terms of like, how our world is changing? Do you see any kind of early signs that this is kind of a little worse than what we think or like, like, what’s the graph telling you at the moment?
Ryan Roslansky
The only thing that it’s telling me right now, is that there not one story happening. And I’m not smart enough, as all of you to understand, like, the nuances in that, but I mean big tech is hiring less. Healthcare, I mean, they can’t hire enough. I mean, they’ll do whatever it costs, which is why some of the skill stuff makes sense, because you can pull people out of other industries that have the right skills into new industries. Even inside of certain companies, you’ll see like half the company hiring way less, half the company hiring way more. So I just think that it’s not one story right now. It’s literally 1000s of stories that are different based on geography, industry and company size. And that’s at least unique to mean, in the 14 years I’ve been looking at this data so. Sorry, it doesn’t give you some crazy insight, but I’m trying to figure out as well.
Raimo Lenschow
Yes, I tried it. Alright, Ryan, thanks for joining us.
Ryan Roslansky
My pleasure.
Raimo Lenschow
That was really, really helpful. Thank you. And thanks for joining us. Thank you.
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