How LinkedIn betrayed a 5-man startup

I think one of the messages here is that if you're a start-up and your product requires a third-party API that you have no control over to function then you're taking a massive risk.

This isn't specific to Linked.In: API access isn't a right. If your product requires a third-party data source and you don't have any contractual agreement with that third-party you have to accept that the rug could be yanked from under your feet at any moment.

And maybe that risk is acceptable to you and your investors - but to not have a backup plan is foolish.

Nobody can possibly think it is a good idea to use someone's API to create a product that directly competes with the API providers' paid offering.

The sense of entitlement to be allowed to use someone's product against them frankly baffles me.

If your product is completely dependent on a third-party API or service in order to function you really only have two possible exits:

  1. Get bought out by the company implementing the API
  2. Get shut out by the company implementing the API

This should serve as a cautionary tale: never place the fate of your company in the hands of someone whose interests may not align with yours.

Business is war. Anyone who doesn't think so hasn't got the enough scars to understand this yet. As a small entity, any time you tangle with large well-funded companies you have to be very aware of the fact that they could shaft you in a dozen different ways whenever the please. That's the hard and cold reality of it.

Contracts and agreements only serve to possibly give you the option to sue, and nothing more. They don't create a guarantee of recovery or reparations in any way at all.

I had one very painful incident with a large Korean multinational corporation a few years ago. This was over a hardware design. We devoted about eight months --nearly a million dollars in cash and man-hours-- to complete a set of designs based on components and assemblies that this OEM was to provide.

They wanted to get our business and pull us away from their main competitor. In-person meetings where had with the top three VP's in the US. Promises were made both verbally and on-paper. Short version: When we were finally ready to go into production we were told that the components in question --components they had recommended and guaranteed as long-availability components-- had been discontinued. Their recommendation: "You need to redesign your product line".

Soon afterwards I learned that other companies that had selected the same components were under the same dire situation. One particular company had closed a deal with the US government and was about to get sued for tens of millions of dollars for not delivering on their contract. On our front, this one event nearly destroyed my company at that time. We survived only to get taken out during the economic downturn due to having been weakened by this event.

In looking at the potential to sue this company our attorneys concluded that they'd need a minimum of $250K just to consider pulling that trigger and another $250K available past that. They expected this multinational to simply bury us with paperwork and an army of lawyers, with the only goal being to cause financial pain and get us to quit. Their recommendation: "Figure out how to survive and lick your wounds. It is nearly impossible to go after these guys and actually come out ahead".

This is how large companies, effectively, make their own rules, their own laws, if you will. While this wasn't the only tangle I've ever had with a large company it was the worst I've had to endure. I was the first domino that got tipped over in a chain of events that ultimately killed a business that I spent the better part of ten years building.

Be careful.

I briefly started working on an application that would have many positive benefits for the LinkedIn community. After reading the API terms and conditions, it was very apparent that I would not have been able to achieve my goals, so I stopped.

The terms and conditions are pretty restrictive, but they are provided. I should not have come as a surprise that their API access was cut off. You should not be developing an application that not only is dependent on one company's API, but also against their terms of service (without an explicit authorization/partnership).

Where is the outrage? I find this an appalling act by Linked In, who seem, this shortly after WWDC, unaware of the power of a strong developer ecosystem. How could you continue to work at such a place knowing this?

Why would anyone bother developing for their community via their API?

Linked In's site itself meanwhile is looking increasingly like Facebook to me and is increasingly irrelevant to professionals. They are under pressure to increase revenue dramatically to get close to justifying an over inflated share price, but losing your corporate values by screwing over people in your ecosystem is very short term thinking, perhaps reflecting a Wall St mindset.

I just don't get all the hand wringing. You are not entitled to unlimited use of another company's data. They can shut you off at any time for any reason. And if you build your company around someone else's API, an essential part of the business plan is preparing for the day when the API-providing company takes notice of what you're doing and evaluates your use of their service, with the expectation that they may shut you down if you threaten them.

If your only response to this is "go cry to various small tech publications", then you're doing it wrong.

I completely disagree with other people's attitudes on this point - startups definitely need to be wary of using third party APIs, but it is incumbent upon companies to create clear and stable terms for developers to operate within if they are thinking of opening an API. It's completely unfair to make representations to people that they rely on to their detriment and then renege at the last minute.

Let's be clear too - it's not as if these guys were making a porn application or something that violated LinkedIn's TOS. Nor were they acting without LinkedIn's consent. Companies reserve rights to revoke access without reason in order to limit their legal liability but they need to be wary of the non-legal consequences to their reputation.

This is an unmitigated disaster for LinkedIn. Obviously if it is a professional network, and they as a company already offer a number of solutions to recruiters, companies and professionals, then almost every app made for their platform is going to compete with their own offerings in some way.

If they aren't willing to set clear boundaries in this regard then they simply need to shut down the API and stop wasting everyone's time. In any event, even if they leave it open they can forget about people making a serious investment in the platform.

I agree, and Pealk definitely admitted as much, that for a startup, relying on an API is incredibly risky. I'd never be on board with a startup that did, no matter how cool the idea.

But LinkedIn doesn't come off looking great either, and I think that was the thrust of the article. It's pretty concerning that they would spend eight weeks talking nice with Pealk, all the while sussing out Pealk's position, and then shut off access with no opportunity to negotiate.

What LinkedIn did wasn't illegal, perhaps not even unethical, considering what passes ever-so-vaguely for 'ethical' in the business world these days. But it was, in the strictest definition of the word, crappy.

Same goes for Facebook or any other big company. If your application depends on them heavily, then they can shut you down with the flip of a switch. If you're not making them money directly, they won't care either. I make the distinction between big and small companies here because if you depend on a small company, there's a lot more chance of opening a dialog and working out some kind of arrangement.

That said, to not hinge the entire outcome of your company on another company is, I feel, business 101. Doing so is a very high risk.

My feelings go out to the guys who started the company though...mistakes or not, it would truly suck to see all your hard work flushed down the toilet.

Hi, author here, don't usually [ever] comment on my own work here - but am interested to hear if other devs have had similar or contrasting experiences working with LinkedIn.

LinkedIn API terms of use says :

Sell, lease, share, transfer, sublicense any Content obtained through the APIs, directly or indirectly, to any third party, including any data broker, ad network, ad exchange, or other advertising or monetization-related party..

Charge, directly or indirectly, any incremental fees (including any unique, specific, or premium charges) for access to LinkedIn's Content or your integration of the APIs in your Application;

Does it mean that one cannot monetize applications created using linkedin api ??

I developed wiserprofile.com to help people build better LinkedIn profiles, and it works entirely against LinkedIn's API. I too found that some of the cool features that I really wanted to build were not allowed by the LinkedIn developer agreement. It's too bad LinkedIn is not willing to open up their API set to allow an ecosystem to flourish - let the developers loose guys and watch your platform grow!

If a company is both a key partner and a competitor at the same time, your business model is faulty.

That said, the LinkedIn API could open certain features only if you act on behalf of a paying LinkedIn user. That way, both LinkedIn and the startups could happily co-exist, even though the startup recreates some of LinkedIns functionality.

To be honest, this app sounds like a feature LinkedIn can easily implement on their own. There is no viable business here. The real thick value lies in the data.. that's 99% of the work. The app just adds 1% value on top of it.

"Put up again thy API into its site: for all they that take the API shall perish by its terms of service."

You may want to sell that LNKD stock you're holding. It's all downhill from here.

The kids (college kids and those who just graduated) are adding me on BranchOut, not LinkedIn. I'm the one who usually has to issue the connection request on LinkedIn, because nobody is fucking using it except people looking for a job and recruiters. It's mostly recruiters. But recruiters are gonna go where they perceive the people to be, so once the facade has fallen LinkedIn is FUCKED. That stock price is gonna start tanking once companies like BranchOut (built into the existing Facebook platform we all know and love) start gaining more ground.

Running your company with the intent of destroying all competition is like running your country with the intent of destroying all people who don't look like you.

"pealk" is a stupid name. I'm not even interested in learning about your product if you named it something stupid. What is it with web start-ups and stupid names?