LinkedIn 2011 Annual Report Download - page 30

offered by our competitors, reduced hiring by our customers or reductions in their hiring or marketing spending
levels due to macroeconomic or other factors and the efficacy and cost-effectiveness of our solutions. If we do
not attract new customers or if our customers do not renew their agreements for our solutions, renew on less
favorable terms, or do not purchase additional functionality or offerings, our revenue may grow more slowly than
expected or decline.
Ultimately, attracting new customers and retaining existing customers requires that we continue to provide
high quality solutions that our customers value, and we focus on customer acquisition and market penetration
rather than pricing. In particular, our hiring solutions customers will discontinue their purchases of our solutions
if we fail to effectively connect them with the talent they seek, and our premium subscribers will discontinue
their subscriptions if they do not find the networking and business opportunities that they value. Similarly,
customers of our marketing solutions will not continue to do business with us if their advertisements do not reach
their intended audiences. Therefore we must continue to demonstrate to our customers that using our marketing
solutions is the most effective and cost-efficient way to maximize their results. Even if our marketing solutions
are providing value to our customers, advertisers are sensitive to general economic downturns and reductions in
consumer spending, among other events and trends, which generally results in reduced advertising expenditures
and could adversely affect sales of our marketing solutions. If we fail to provide high quality solutions and
convince customers of our value proposition, we may not be able to retain existing customers or attract new
customers, which would harm our business and operating results.
Because we recognize most of the revenue from our hiring solutions and our premium subscriptions over the
term of the agreement, a significant downturn in these businesses may not be immediately reflected in our
operating results.
We recognize revenue from sales of our hiring solutions and premium subscriptions over the terms of the
agreements, which is typically 12 months. As a result, a significant portion of the revenue we report in each
quarter is generated from agreements entered into during previous quarters. Consequently, a decline in new or
renewed agreements in any one quarter may not significantly impact our revenue in that quarter but will
negatively affect our revenue in future quarters. In addition, we may be unable to adjust our fixed costs in
response to reduced revenue. Accordingly, the effect of significant declines in the sales of these offerings may
not be reflected in our short-term results of operations.
We depend on world class talent to grow and operate our business, and if we are unable to hire, retain and
motivate our personnel, we may not be able to grow effectively.
Our future success will depend upon our continued ability to identify, hire, develop, motivate and retain
world class talent. Our ability to execute efficiently is dependent upon contributions from all of our employees,
in particular our senior management team. Key institutional knowledge remains with a small group of long-term
employees and directors whom we may not be able to retain. We may not be able to retain the services of any of
our long-term employees or other members of senior management in the future. We do not have employment
agreements other than offer letters with any key employee, and we do not maintain key person life insurance for
any employee. In addition, from time to time, there may be changes in our senior management team that may be
disruptive to our business. If our senior management team, including any new hires that we may make, fails to
work together effectively and to execute our plans and strategies on a timely basis, our business could be harmed.
Our growth strategy also depends on our ability to expand and retain our organization with world class
talent. Identifying, recruiting, training and integrating qualified individuals will require significant time, expense
and attention. In addition to hiring new employees, we must continue to focus on retaining our best talent.
Competition for these resources is intense, particularly in the San Francisco Bay Area, where our headquarters is
located. We may need to invest significant amounts of cash and equity for new employees and we may never
realize returns on these investments. If we are not able to effectively increase and retain our talent, our ability to
achieve our strategic objectives will be adversely impacted, and our business will be harmed.
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