Nipping at LinkedIn’s heels

LINKEDIN is not the only game in town. With 60m members, Viadeo is the world’s second-biggest professional social network. It is strong in its home country, France, and in China. Xing of Germany, the third largest with 14m members, guards the gate of the German-speaking world. Neither is standing still.

Viadeo has been the more ambitious, adopting a “multilocal” strategy based on different platforms in different markets. Founded in 2005, it has branched out mainly through acquisitions. Today it is the biggest professional network by membership in France and Francophone Africa, has a significant business in Russia and, most important, is in first place in China. It bought Tianji, a Chinese business-networking site, in 2008 and has built its membership to 20m. Viadeo’s co-founder and chief executive, Dan Serfaty, moved to China in 2011, a sign of how much the market matters to him.

The big problem for Viadeo is making money outside France, which accounts for 95% of its turnover—€31m ($42m) in 2013. Viadeo has yet to turn an operating profit (though it claims it is profitable in France). That is not unheard of for startups, especially those enthusiastic about acquisitions, but investors will be keeping an eye on how much cash it burns.

Things may be about to improve, if Mr Serfaty is right about China. Viadeo has had trouble getting Chinese businesses to pay for its services because no one trusted the profiles that members posted. To overcome this, Viadeo launched a programme of cross-verification, in which members verify line-by-line the information in other members’ CVs. Early signs are said to be promising.

However, Viadeo stumbled when it went public in July. Unlike most French internet firms, which have listed abroad—especially on NASDAQ in America—the firm launched its initial public offering on Euronext in Paris. Had it gone well, it could have established Paris as a place where sparky French tech startups could get financing. But the shares opened below their launch price and have been sliding ever since.

Viadeo is also under threat from its rivals. Profitable Xing, which had pulled back from foreign ventures, got a new boss in 2012, who is going after business recruitment. LinkedIn, meanwhile, is encroaching on two markets that Viadeo hoped it had sewn up (see article). In France it has fewer members, but more traffic, it claims. And in China it has picked up steam and members since launching a Chinese-language site in February.