4 ms·

Can LinkedIn predict when companies are in trouble?

49 points by muratmutlu 16y ago

d4nt 16y ago
It's all speculation of course, but I suspect they could probably create a "disruption index" for every company based on sudden changes in turnover or profile activity. What I find interesting is, if they ever did try and do that, how might the financial authorities respond. That data could be worth millions if used to trade shares in those companies. Would it be considered insider trading? I suspect LinkedIn would be put under pressure to publish the index to avoid getting into trouble.
- aaronblohowiak 16y ago
  probably not: look at how slow / weak the fed has been to react to more blatant forms of insider trading that are already in play
  - dsplittgerber 16y ago
    I think you mean the SEC and/or the "feds" (FBI), not the federal reserve bank? The problem with insider trading is that a verdict hinges on proving intent to defraud, which is very difficult to ascertain. Also, IMHO, insider trading is mostly used as an easy way to generate publicity and give the general public the fuzzy feeling that "something is being done", whilst achieving rarely something of value for the markets and society. There are many things much more worth of pursuing with limited resources than insider trading. Alas, that's what you get when you staff an oversight agency like the SEC with lots of lawyers.
ig1 16y ago
Already being done. There are dozens of firms out there which specialize in this kind of analysis (data mining sites like linkedin, amazon, twitter, google insight etc. for trading purposes).
- dsplittgerber 16y ago
  Please elaborate, this sounds extremely interesting. Which firms are doing that with which data and what are the results one can get from that?
  - Robin_Message 16y ago
    Timetric mines a variety of government and NGO data sources for economic data, including real time updates. I guess they would know who is collecting social data, if they aren't doing it themselves.
  - ig1 16y ago
    Generally prop trading firms but also sector analysts at major investment banks. How they use this data is mostly considered propriety, but you can figure out the obvious uses. Using Google Insights and Amazon is actually immensely valuable is this space, as you can use product rankings/searches to figure out how products are doing well before any official announcements. For the social media stuff a lot of financial firms use third-party technology. There's a whole load of firms that do sentiment analysis on social networks. Most of the companies in this space build products for marketing/PR teams, but sector analysts in consumer markets often use them as well. Ironically the best way to track down the firms doing this stuff is to search Linkedin for people with data mining expertise working in the financial sector :-)
    - dsplittgerber 16y ago
      Thanks for sharing your insights! Mind another question? How useful is that data really? I see the point in Amazon revenue #s of specific products etc, but "sentiment analysis".. really? Can one actually get actionable data from mining social networks like Twitter for sentiments? This reminds me of "long on sunny/short on rainy days"-trading patterns.
      - pierrefar 16y ago
        Earlier this year I was at a conference where the keynote talked about "sentiment analysis" of social media. Using real tweets as examples he went on to debunk the current techniques as useless, really, because they can't understand the sentiment. The current techniques he knew of and shared were all keyword based. The OP mentioned the problems with this kind of analysis, and I agree too. Edit: typo.
elblanco 16y ago
I'd have a hard time relying on the data. Even in my own personal linkedin contacts, it's full of out-of-date data. Most people seem to be a bit lazy with keeping their profiles up-to-date.
- muratmutlu 16y ago
  I think it's more about how LinkedIn users are reactive to possible changes in workplace rather than general housekeeping. Just like most people only update their CV when they are looking for a new job. When we started to hear rumours of layoffs at Nokia, my activity feed was buzzing with 'xxxx updated experience/profile/education' etc. Interesting topic
gacba 16y ago
If you watch your LinkedIn profile, you can tell two things, based on my observations: People only update their profile on LinkedIn when they are looking for a new job, or just lost a job (for the most part). Some keep tweaking it all the time, but you can spot the ones who never have activity and then suddenly have 7 updates...you know something's cooking there. You can spot general trends about economic activity, assuming your friends are geospatially similar. If, suddenly, you get spikes in activity where none existed a month ago, you can assume that the job market in your area is getting very turbulent. You can decide whether it's positive or negative based on what you see ("Hey I got a new job", or just plain profile updates while someone is looking...) Very interesting.
- biot 16y ago
  A guy at work has a 100% prediction rate for when people are about to (voluntarily) leave the company. And it's as simple as "this person never updates their profile, and the last few weeks they're updating everything in it". It'd be interesting to find out if someone has used this as a negotiation tactic. It would likely only work if you're recognized as a rockstar employee, but a few weeks before you talk to your boss to negotiate a salary increase, be sure to routinely update your LinkedIn profile. At the very least, if your boss gets LinkedIn updates it'll make them think twice before using the "He/she wouldn't quit if I don't give them a raise" line of justification for denying a raise.
middlegeek 16y ago
This is exactly why about 4 months ago I changed my settings so none of my connections are notified when I edit my details.
MortenK 16y ago
Definitely interesting. As other commenters have mentioned, a spike in status and experience updates definitely often signifies something is going down. Another one is recommendations. When one person suddenly is getting 2-3 recommendations from colleagues, they are usually on their way out. If a lot of people from the same company is getting recommendations left and right from each other, the company is either going down or there is serious downsizing imminent. Very interesting side effect of sites like LinkedIn.

49 points by muratmutlu 16y ago

d4nt 16y ago

It's all speculation of course, but I suspect they could probably create a "disruption index" for every company based on sudden changes in turnover or profile activity. What I find interesting is, if they ever did try and do that, how might the financial authorities respond. That data could be worth millions if used to trade shares in those companies. Would it be considered insider trading? I suspect LinkedIn would be put under pressure to publish the index to avoid getting into trouble.

aaronblohowiak 16y ago
probably not: look at how slow / weak the fed has been to react to more blatant forms of insider trading that are already in play
- dsplittgerber 16y ago
  I think you mean the SEC and/or the "feds" (FBI), not the federal reserve bank? The problem with insider trading is that a verdict hinges on proving intent to defraud, which is very difficult to ascertain. Also, IMHO, insider trading is mostly used as an easy way to generate publicity and give the general public the fuzzy feeling that "something is being done", whilst achieving rarely something of value for the markets and society. There are many things much more worth of pursuing with limited resources than insider trading. Alas, that's what you get when you staff an oversight agency like the SEC with lots of lawyers.

ig1 16y ago

Already being done. There are dozens of firms out there which specialize in this kind of analysis (data mining sites like linkedin, amazon, twitter, google insight etc. for trading purposes).

dsplittgerber 16y ago
Please elaborate, this sounds extremely interesting. Which firms are doing that with which data and what are the results one can get from that?
- Robin_Message 16y ago
  Timetric mines a variety of government and NGO data sources for economic data, including real time updates. I guess they would know who is collecting social data, if they aren't doing it themselves.
- ig1 16y ago
  Generally prop trading firms but also sector analysts at major investment banks. How they use this data is mostly considered propriety, but you can figure out the obvious uses. Using Google Insights and Amazon is actually immensely valuable is this space, as you can use product rankings/searches to figure out how products are doing well before any official announcements. For the social media stuff a lot of financial firms use third-party technology. There's a whole load of firms that do sentiment analysis on social networks. Most of the companies in this space build products for marketing/PR teams, but sector analysts in consumer markets often use them as well. Ironically the best way to track down the firms doing this stuff is to search Linkedin for people with data mining expertise working in the financial sector :-)
  - dsplittgerber 16y ago
    Thanks for sharing your insights! Mind another question? How useful is that data really? I see the point in Amazon revenue #s of specific products etc, but "sentiment analysis".. really? Can one actually get actionable data from mining social networks like Twitter for sentiments? This reminds me of "long on sunny/short on rainy days"-trading patterns.
    - pierrefar 16y ago
      Earlier this year I was at a conference where the keynote talked about "sentiment analysis" of social media. Using real tweets as examples he went on to debunk the current techniques as useless, really, because they can't understand the sentiment. The current techniques he knew of and shared were all keyword based. The OP mentioned the problems with this kind of analysis, and I agree too. Edit: typo.

elblanco 16y ago

I'd have a hard time relying on the data. Even in my own personal linkedin contacts, it's full of out-of-date data. Most people seem to be a bit lazy with keeping their profiles up-to-date.

muratmutlu 16y ago
I think it's more about how LinkedIn users are reactive to possible changes in workplace rather than general housekeeping. Just like most people only update their CV when they are looking for a new job. When we started to hear rumours of layoffs at Nokia, my activity feed was buzzing with 'xxxx updated experience/profile/education' etc. Interesting topic

gacba 16y ago

If you watch your LinkedIn profile, you can tell two things, based on my observations: People only update their profile on LinkedIn when they are looking for a new job, or just lost a job (for the most part). Some keep tweaking it all the time, but you can spot the ones who never have activity and then suddenly have 7 updates...you know something's cooking there. You can spot general trends about economic activity, assuming your friends are geospatially similar. If, suddenly, you get spikes in activity where none existed a month ago, you can assume that the job market in your area is getting very turbulent. You can decide whether it's positive or negative based on what you see ("Hey I got a new job", or just plain profile updates while someone is looking...) Very interesting.

biot 16y ago
A guy at work has a 100% prediction rate for when people are about to (voluntarily) leave the company. And it's as simple as "this person never updates their profile, and the last few weeks they're updating everything in it". It'd be interesting to find out if someone has used this as a negotiation tactic. It would likely only work if you're recognized as a rockstar employee, but a few weeks before you talk to your boss to negotiate a salary increase, be sure to routinely update your LinkedIn profile. At the very least, if your boss gets LinkedIn updates it'll make them think twice before using the "He/she wouldn't quit if I don't give them a raise" line of justification for denying a raise.

middlegeek 16y ago

This is exactly why about 4 months ago I changed my settings so none of my connections are notified when I edit my details.

MortenK 16y ago

Definitely interesting. As other commenters have mentioned, a spike in status and experience updates definitely often signifies something is going down. Another one is recommendations. When one person suddenly is getting 2-3 recommendations from colleagues, they are usually on their way out. If a lot of people from the same company is getting recommendations left and right from each other, the company is either going down or there is serious downsizing imminent. Very interesting side effect of sites like LinkedIn.