This is part two of ProgrammableWeb's series on the End of the API Economy as We Know It. In part one, we considered whether it's time to rethink the wisdom of basing your business on a third-party API.
The promise of the API Economy is a value proposition that’s hard to ignore. The cost of entry is low and the playing field is surprisingly level. As an example, you can wire into the free APIs of a large data provider such as Twitter or Facebook, add value to the information the provider delivers, and voila, you’ve delivered a new application at nominal cost. Many times the value-add is to devise analysis algorithms relevant to a particular market segment and apply those algorithms to some data that’s ingested from APIs. The big data providers do the heavy lifting of getting the data, you enhance its value with your unique analysis of the data, and then you offer the results to interested parties for profit.
The business model is fantastic as long as companies have access to the APIs they need, but it has one major flaw. If access to those APIs goes away, so too can the business. Such an occurrence is not rare. In fact, it happens all the time, and now ever more so in the wake of controversy surrounding the Cambridge Analytica/Facebook debacle.
In a previous article, It's the End of the API Economy As We Know It, ProgrammableWeb provided an overview of the problem. Now for a look at the details through the eyes of one company that actually survived being shut out of the API that was the lifeblood of its business. This is the story of PeopleLinx and its founders. PeopleLinx made good money using the LinkedIn API, and the opportunities for growth seemed limitless…until LinkedIn discontinued PeopleLinx’s access to its API.
Patrick Baynes, LinkedIn Employee #162
Patrick Baynes didn’t plan to be a founder of a tech startup when he graduated from college in 2007. Yes, at some point he wanted to have a business of his own but for the time being, he was just guy with a degree in marketing who wanted a job, hopefully one in tech.
Baynes liked tech. Not only did he find the notion that he could wear whatever he wanted to work appealing, he sensed that the tech culture was one in which he could thrive, so he focused his job search on tech companies that were growing.
Shortly after graduation, Baynes came across an article in Google News reporting that LinkedIn was opening offices outside of Silicon Valley and that it was hiring. The article contained an email address for making job inquiries. He wrote to LinkedIn. LinkedIn wrote back. A few months later he was employee #162, working in Customer Operations out of LinkedIn’s newly formed office in Omaha, Nebraska. Baynes' roots were in the Midwest, so the move from upper New York State suited him.
His new job was to field inquiries and complaints from customers. Eventually he rose to a position in managing a group in Customer Operations. During that time Baynes learned the details of what running a large scale social networking company entailed. He also saw the writing on the wall — LinkedIn was growing quickly. The company needed more qualified talent to support its astounding growth rate. An undergraduate marketing degree from Alfred University was good enough to get Baynes in the door in 2007, but by 2009 the talent he was competing against to move up the corporate ladder had MBAs from the likes of Stanford. Baynes knew he needed to make a change, so he did. He quit his Linkedin even before lining up a new job. It was a daring move, because in fact LinkedIn was the only real job he'd ever had. He was 24 years old.
Enter Nathan Egan
Nathan Egan joined LinkedIn in 2008 as a sales representative. Egan was hired to sell LinkedIn’s recruiting products to big corporations. Along the way, he came to understand that LinkedIn’s value as a social network went way beyond being a friends network that hosted resumes. LinkedIn’s underlying data offered profound insights into all sides of its user base, from employers to employees to advertisers. Also, Nathan learned that the way a company or user was perceived could be shaped by manipulating the way its data was presented on its LinkedIn page. A little lightbulb went off in his head: shaping perceptions using data from B2B social media was a service that could be sold to corporations at a premium. Egan’s understanding would serve him well, earlier than he might have imagined given what was ahead.
2008 was a horrible year for business. The Great Recession was just beginning to lay waste to the economy. The Dow Jones Industrial Average was in freefall. Lehman Brothers, an investment bank that had been a pillar of Wall Street since 1850, went bankrupt in September. General Motors filed for Chapter 11 protection less than a year later. LinkedIn was suffering, too. Paying customers were few and far between. Egan saw an opportunity behind this downturn. Sensing some lemonade in a world full of lemons, he pitched the idea to LinkedIn executive management to offer professional services that leveraged the enormous amount of B2B data it could extract from its vast social network. LinkedIn passed on the idea, so Egan quit. If LinkedIn wouldn’t act on his idea of offering professional services based on B2B social media, then he would. A few weeks after leaving LinkedIn, Egan contacted Baynes and offered him a consulting contract to provide training to corporations about how to optimize their use of LinkedIn.
Two Eyes are Better than One
The most important thing to understand about Baynes and Egan's business is that it was a substantial business even before they wrapped the name “PeopleLinx” around it. They understood early on that corporations had a limited awareness of how to leverage the power of B2B social networks. While companies had an almost intuitive appreciation that there was value to be realized, they just didn’t know how to do it. Those companies needed help and the two ex-LinkedIn employees were more than willing to provide it.
PeopleLinx didn’t start out with a software platform, although they would develop one later. Rather, the opening move was to do on-site training sessions, going into corporations to show employees how to get the most bang for their efforts on LinkedIn and other social media platforms. They talked about the little things, such as making sure that profile headshots showed two eyes instead of one, or that employees complete all the fields in their personal profile. The corporations ate it up. In addition to training, Baynes and Egan did consulting, working with the corporate executives to help devise and execute real world strategies using B2B social media as the linchpin, of which LinkedIn played a large role. The PeopleLinx value proposition was compelling. In 2014, then COO Kevin O’Nell said, “For every 65 year old that retires there's a 22 year old that comes into the workforce with hundreds of connections on LinkedIn [and] thousands of connections on Facebook, and they will want to immediately use that to do better in their job, given the opportunity to do so.
Their efforts were a smashing success. The ex-LinkedIn employees were making more money than they had hoped for. Now it was time to build the software necessary to get them to the next step, social selling.
Setting up the PeopleLinx Platform
Baynes and Egan knew a great deal about showing how to enhance the value of B2B social media using LinkedIn, but, they didn’t know anything about building software. Early on they hired a few independent consultants to start their digital presence. But when the time came to take that next step and build the complete platform, they contacted a mutual friend, Chris Cera, CEO at Arcweb Technologies. Arcweb Technologies creates custom software solutions on behalf of companies such as PeopleLinx.