The only way to build a stronger business base is to find services that consumers will find useful.

LinkedIn can't tell how many customers it actually has and, more importantly, relatively few of them find the site of enough interest to visit even on a monthly basis. If the number of our actual members does not meet our expectations or we are unable to increase the breadth and frequency of our visiting members, then our business may not grow as fast as we expect, which will harm our operating and financial results and may cause our stock price to decline. Further, a substantial majority of our members do not visit our website on a monthly basis, and a substantial majority of our page views are generated by a minority of our members. Given the challenges inherent in identifying these accounts, we do not have a reliable system to accurately identify the number of actual members, and thus we rely on the number of registered members as our measure of the size of our network. The number of registered members in our network is higher than the number of actual members because some members have multiple registrations, other members have died or become incapacitated, and others may have registered under fictitious names. Why? As BNET's Jim Edwards pointed out, LinkedIn added some scary lines to its S-1 that explain its underlying problem: It has gotten expensive to attract people. If there are some economies of scale in this business, they've yet to show themselves. Cost of revenue increased at about the same pace as revenue, as did product development and general and administrative.

In the first quarter of 2011, LinkedIn increased its revenue by 110 percent year over year, and yet its income from operations was only 40 percent that in Q1 2010.

Linkedin stock price history