Three Reasons LinkedIn Broke the Bank for Lynda.com

Teaching isn’t traditionally viewed as a high-paying career choice. But building software for teaching? That appears to be a little more lucrative.

At least it was today, when LinkedIn announced the $1.5 billion acquisition of online education company Lynda.com. It’s the online business network’s largest acquisition ever by a wide margin. The company paid around $175 million for Bizo last summer, the closest LinkedIn’s ever been to a billion-dollar acquisition until now.

Lynda.com provides video courses to paying subscribers hoping to learn online, with tutorials on a wide range of business subjects from Web design to 3-D animation. It’s one of a number of companies working in this space, including well-known startups like Coursera and Codecademy that were both founded in the past five years.

Unlike these newer companies, though, Lynda.com is a veteran. The company has been around for nearly 20 years. In other words, LinkedIn is bringing on a partner with the longest, most-established resume.

In 2013, Lynda.com raised $103 million in a funding round that helped put the site on the map even though it was already 18 years old. It is also profitable, and has been since its first year of existence because unlike a lot of consumer tech companies these days, it actually charges for its content.

But there are many questions still unanswered. Will LinkedIn and Lynda.com fuse their membership businesses? Will Lynda.com operate independently in the long term? (For now, it will, said LinkedIn.) How soon will we see Lynda courses promoted or suggested within LinkedIn?

LinkedIn CEO Jeff Weiner and Head of Content Ryan Roslansky flew to Lynda.com headquarters in Carpinteria, Calif., to begin talking about these kinds of integration issues Thursday morning.

In the meantime, there are many reasons LinkedIn broke the bank for an ed-tech company. Here are a few of them:

The Missions Align

This is the element of the acquisition that executives from both companies are touting, and it makes sense. LinkedIn aims to connect people with job opportunities. Lynda.com aims to connect people with an education about those jobs. The premise: In the current market, you really won’t have the opportunity if you don’t have the education needed to go along with it.

Weiner often refers to this as the Economic Graph, which is a fancy way of describing the connection of people with job opportunities — all through LinkedIn, of course. As Weiner described it to Re/code last year: “That’s the way we envision ourselves creating economic opportunity for every member of the global workforce.”

LinkedIn is painting a scenario in which you search for a job, see the skills required for that job, and then are directed to a course from Lynda.com that will train you in those skills. Alternatively, a recruiter could search for available candidates based on the courses they’ve taken. You can already add courses to your profile, but courses endorsed by LinkedIn may carry more clout.

Students

LinkedIn is keen on getting college students onto its platform, especially college seniors about to enter the job market. Roslansky said the Lynda.com acquisition further promotes this focus, and could help get LinkedIn’s foot in the door of some of these classrooms.

Lynda already works with 40 percent of the nation’s colleges and universities, including all of the Ivy League schools.

“Colleges are [using] this platform to help students learn skills they need before they take a class or during a class or to augment some of the materials these institutions are using in their day-to-day,” Roslansky explained. “This platform reaches students.”

Weiner foreshadowed this concept with Re/code in an earlier interview: “The biggest focus area for students is going to be helping them to get their first job.”

Of course, LinkedIn can’t help students who aren’t using LinkedIn, and Lynda.com could presumably help with that. (After shelling out $1.5 billion, LinkedIn better hope so.) There are plenty of competitors, such as Chegg, trying to grab the college market to offer all kinds of services.

A Reason to Come Back

Weiner told Re/code last year that a very small minority of people on LinkedIn are looking for a job. That means they’re coming to LinkedIn for other reasons, such as to read or create content. The company has made a big push in the last year to encourage that by expanding its publishing tool and redesigning its homepage to ensure you see more stories and news.

Adding Lynda.com — which is another kind of content — to the mix gives people yet another reason to spend time on LinkedIn. It’s probably safe to assume that you’ll be able to share and watch Lynda.com videos in your LinkedIn stream; perhaps you’ll even be able to create your own.

And, as Facebook is proving, video content is very important to the future of all Internet companies. More video typically means more money from video advertisers. Obviously, LinkedIn wouldn’t mind that.

Speaking of video, here is an interview that Re/code Co-Executive Editor Kara Swisher did with Lynda.com founder Lynda Weinman in 2013:

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