LinkedIn Preps Spy Network: Is YOUR Company Safe?
Beware data greedy Facebook? LinkedIn is flexing ITS user data muscle.
What can the online professional network seeking a hefty IPO pay day do to prop up its perceived value? How about trying to milk its vast user base for valuable, non-public information on their employers?
Reid Hoffman believes he is sitting on a LinkedIn gold mine and aims to mine for the gold. LinkedIn boasts an 18 million strong data base of high-level, professional CVs and continues to garner thousands of resumes on a daily basis. In LinkedIn To Mine User Data For Corporate Espionage I analyze how the impending “LinkedIn Research Network” is a new fangled attempt at waging an age-old battle: Industrial spying.
LinkedIn’s Mike Gamson unveiled the new “primary research services” initiative at an event in New York City last week produced by O’Reilly Media.
Tim O’Reilly helped spur along his conference presenter’s promotional case with a personal post at “O’Reilly Radar,” positioning the new LinkedIn service as a new fangled verison of the “Gerson Lehrman Group (GLG),” which O’Reilly assures has “made a splash” and “charges hefty subscription fees.”
O’Reilly undoubetdly is alluding to GLG’s recent venture funding, perhaps unaware (or uninterested) that GLG’s turn in the limelight has also included investigation by the New York attorney general regarding potentialy improper public company insider information transfers from its “experts” to hedge funds.
Gerson Lehrman was coincidentally a “Platinum” sponsor of O’Reilly’s conference!
O’Reilly full steam ahead on the “competitive advantage” he deems O’Reilly presenter LinkedIn will have over sponsor GLG, with hedge funds:
The big difference is that GLG has crafted a stable of hand-picked experts, while LinkedIn will be data mining its database of millions of users to find potential experts. This is significant because hedge funds and other financial firms get little advantage if they are all taking to the same people, even if those people are the top experts in the field. Competitive advantage, referred to in financial markets as alpha, only comes when you have information that others do not.
O’Reilly ought to know? After all, he claims an “uncanny predictive sense,” which he cannily bolsters by “making noise” on behalf of favored companies. SEE: Web 2.0 Startups: Will Geek Chumby ‘Fade Away’ in 2008?
O’Reilly hails the interest of interested financial parties in obtaining “information that others do not” have, thanks to LinkedIn and its data mined “insiders,” soon.
Insider knowledge, insider trading…?
LinkedIn’s Mike Gamson (as per eWeek):
The service will help hedge fund managers and investment banks find people who used to work at a company they’re interested in, or even who is working for a customer of a company they are interested in. ”Let’s say I’m thinking about making an investment in a producer of product X. I might want to speak to people that sell that product, people that buy that product, or that used to work at that company as part of my research process to have a better understanding of how valuable that product is.”
BUT, “let’s say” the “producer of product X” does NOT want current or past employees talking to hedge funds and investment banks about its proprietary, confidential, insider goings on.
Corporations have instituted policies to safeguard against their employees serving as Gerson Lehrman “experts.”
BEWARE LINKEDIN? Reid Hoffman’s user data mine poses greater net potential risks to society than Mark Zuckerberg’s does. IS YOUR COMPANY SAFE, FROM LINKEDIN?
MORE: AP On LinkedIn: Social Networking Gold Mine at $5 per User? and Reid Hoffman: LinkedIn About Face (book)
ALSO:The REAL Google (and Facebook) Nightmares: Eternal Data Traps and How Web 2.0 Meetups Displaced the New York Software Industry and MySpace to Facebook: Where is Your ‘Reach, Relevancy, Results’? OMMA Report and Henry Blodget Tech Ticker Puts Yahoo Finance at SEC Risk