After LinkedIn Corp. reported earnings last month that showed a disappointing sales forecast, the stock dropped as much as 43 percent. Embarrassed financial analysts apologized and adjusted their outlook on the company.
Jeff Weiner, LinkedIn's chief executive officer, had damage control of his own to do. He reassured his staff during an all-hands meeting that everything would be all right, and he later backed up his words by putting $14 million—his stock award for the year—into a pool for employees.
Weiner sat down with Bloomberg Television's Emily Chang to explain how he's navigating the turmoil. Here's an excerpt of their chat on Studio 1.0:
After your first-quarter earnings report, the stock plummeted 40-plus percent. It still hasn't recovered. Is the magnitude of that market reaction fair?
Weiner: Who's to say whether or not it's fair? It's a market. That's what markets do, and markets determine the day-to-day price. We, through our execution, will determine the long-term value. I think it was a surprise. We weren't expecting that kind of response. When you look at the core elements of our business, they remain healthy.
Analysts went so far as to say, "We're sorry. We got it wrong." Do you think there's something that they don't get, that investors aren't understanding?
I think it's expectations. Companies that experience hyper-growth for sustained periods of time—I think there's a natural inclination at times to extrapolate those growth rates out over long periods of time. And in the history of every hyper-growth company (literally every hyper-growth company), there comes an inflection point where the expectations of analysts or investors start to outstrip the fundamentals of the business. The question isn't whether or not that's gonna happen. The question is how companies execute through that.
The analysts' concern is that their thesis, their very thesis about what LinkedIn is, was wrong—that they thought you were a fast-growth company but instead, you're a slower-growth company, more like a software-as-a-service company. What's right?
Oh, I think it's all relative. Growing at 30 percent, growing in the mid-20s, that's still pretty healthy growth by virtually any standard, any measure.
You gave a rousing speech to employees at an all-hands meeting. You said, "LinkedIn is the same company it was before this happened. You are the same team. I'm the same CEO." How does Jeff Weiner, the person, feel about this? Not the CEO, but you: Does it sting a little?
I'm not sure I'd say it stings. There was some surprise, which we touched on earlier. You want to make sure you're there for the people that matter most. First and foremost, are we still able to create value for our members and customers? And nothing whatsoever has changed in that regard.
You want to make sure our employees are OK, especially those that haven't experienced something like this before. There's a number of us, especially on the leadership team, that have worked at companies that have gone through similar periods. Some of the most valuable companies in the world have gone through significant corrections. A few of those companies have gone through multiple corrections. And they never lose sight of their long-term sense of purpose, their long-term mission, their long-term vision. It's about continuing to execute. So that's where we want to remain focused.
Is there something that you think you could've communicated better? TechCrunch published a post titled, "LinkedIn's problems run deeper than valuation. LinkedIn is now, at best, a business-card holder; at worst, a delivery service for spam." How do you respond to that?
Everyone has their opinions, and it's not going to de-focus us in any way. It's also interesting to see those comments now, but the company is the exact same company it was the day before earnings. So I think our core product offering has never been stronger. I think we've got the best road map we've had—certainly in the seven years that I've been at the company. We continue to see gains and engagement. And that's what it's all about.
So do you think you can re-accelerate growth?
That's certainly the objective over time.
Has this latest situation impacted morale at all?
If anything, it brings people closer together. And the more you go through these kinds of challenges, you meet these challenges head-on, and you're successful in recognizing that nothing fundamental has changed. The stronger the team becomes, I think the stronger we become as a company.
Watch Chang’s full interview with Weiner on Bloomberg TV's Studio 1.0 on March 6 at 12 p.m. Eastern Time (9 a.m. Pacific Time), or stream it at bloomberg.com/tv.