
How LinkedIn betrayed a 5-man startup - gsibble
http://thenextweb.com/insider/2012/06/22/how-linkedin-betrayed-5-man-startup-pealk-and-why-developers-should-be-concerned/
======
objclxt
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.

~~~
legutierr
But what about all of those software businesses that have built on top of the
iOS API + App Store? Would you say that they are also taking a massive risk?
Apple can cut off any app that it wants at any time, almost for any reason,
and yet thousands of independent developers are building profitable businesses
on top of their platform.

The issue is not a dependency on an API or platform. The issue is the nature
and character of the company upon which you are depending. In spite of some
well-publicized hiccups, Apple has made an effort to nurture its developer
community.

The point of the article is not that dependency is bad (although it may very
well be), but rather that LinkedIn is a bad partner, and it's not worth
spending any effort to build a business on their platform.

What I'm curious about is what companies are similarly risky to build your
business on.

~~~
balloot
It's not that complicated. If you build your company on the back of another
company you must abide by their TOS. If your business plan is to build the
best porn app on the App Store, you would be similarly disappointed.

In general, if your business plan relies on the goodwill of another company
and you provide little value to that company in return, you don't have a very
good business plan.

~~~
legutierr
I don't think it's enough to rely on the TOS. Sure, there are obvious examples
like porn on the iPhone where the TOS will give you a clear answer.
Frequently, however, the TOS are ambiguous and are interpreted inconsistently.
They can also be changed at will.

Sure, you're right that developers should try to give as much benefit back to
their platform provider as they derive from the platform. But the fact is that
different companies perceive benefit in different ways with reasoning that is
opaque. Often a decision can depend on a strategic direction for the firm that
you are not privy to.

All this is why the reputation of the company matters so much. From reading
the article, it looks like LinkedIn not only acted in a very inconsistent
manner--giving praise before shutting them down--but they even began reverse-
engineering the application. That's not the kind of behavior that breeds a
healthy ecosystem regardless of whether they have all the right to act that
way, and regardless of whether Pealk was careless in relying so heavily on
LinkedIn.

If everyone were to take a cautious approach to the APIs and platforms that
big companies offer, as has been suggested in this thread, then the tech
sector would be a much less interesting place. The fact is that a lot of
innovation happens because there actually are API and platform providers out
there that care about their developers and won't pull shit like this.

~~~
balloot
You're complicating something that isn't that complicated. LinkedIn's TOS very
clearly states in the terms that it is illegal to "Use the APIs in an
Application that competes with products or services offered by us"

So when you see:

<http://talent.linkedin.com/Recruiter>

And your site is using the API to create a service for recruiters, it seems
crystal clear to me that you are violating the LinkedIn TOS. This is not some
grey area or some arbitrary changing of the rules - it is a very clear
violation of LinkedIn API guidelines. I just don't see how this proves even a
little bit that LinkedIn doesn't "care about their developers".

And for the bigger picture, it is amazing to me that a significant number of
people expect LinkedIn to sit around while some other company attempts to
undercut LinkedIn's own premium product using LinkedIn's API.

------
gergles
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.

~~~
oz
>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.

I thought as much. If they allow it, then great, but you're asking for
trouble.

The cross-platform messaging app Kik was pulled from Blackberry App World for
similar reasons:

<http://www.kik.com/blog/2010/11/rim-blackberry-kik/>

Edit: Added 'App World' clarification.

------
pygorex
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.

~~~
tjic
Excellent point.

Corollary: when the other company is figuring out how generous of an offer
they need to make for choice #1, they know that your next best alternative is
choice #2 (for $0).

------
robomartin
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.

~~~
klbarry
Would it be possible to email me the name of the company (or write it here?)
My email is in my profile.

~~~
robomartin
I don't think there's any point in posting it publicly. Particularly several
years past the event. Tell me why you want the name. If it makes sense I'll
certainly provide it privately along with further details if necessary.

------
donretag
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).

~~~
spinlock
this is the point I came to make. LinkedIn's TOS specifically disallow apps
that cut into their turf. These guys should be negotiating to get their
codebase bought and their team acquired.

------
lancewiggs
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.

------
balloot
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.

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

I don't think so. The main issue is that people think that there are APIs
because companies promote their interoperability to gain developers. Companies
are not being sincere and nobody is taking notice. To not repeat this and
other opinions I post one of my recent posts on the subject: "Reverse
Engineering and The Cloud" [http://blog.nektra.com/main/2012/06/01/reverse-
engineering-a...](http://blog.nektra.com/main/2012/06/01/reverse-engineering-
and-the-cloud/)

------
jval
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.

------
davesims
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.

~~~
flatline3
I wouldn't even call it crappy. LinkedIn truly didn't owe them _anything_.

~~~
Jare
In this context, LinkedIn owes them respect and honesty. Bait and switching is
crappy behaviour.

~~~
flatline3
Why? They were abusing LinkedIn's service by competing with them.

LinkedIn took the time to speak with them, evaluate the situation, and then
make an informed decision about whether they wanted to support their
appropriation of LinkedIn's data.

~~~
davesims
It's crappy human behavior, which is not to say 'bad business practice', to
pretend to work with someone and support their efforts for 2 months, and then
summarily shut down their business simply because LinkedIn made an 'informed
decision' that 'we don't owe you anything.'

Let's not confuse the fact that, although businesses certainly have a right to
defend their own interests any way they see fit within the law, that has
absolutely no bearing on whether or not the community they conduct business in
will call them out when they act in a basically unkind or deceptive manner.

The former has to do with business, fine print and the dog-eat-dog, watch-
your-back world of modern commerce. The latter has to do with basic human
decency, trust and the goodwill of the community you do business in.

"It's just business" is all well and good, but don't get butt-hurt when the
community that you work with looks at your behavior and says, "it sucks that
you did it that way." That's just the cost of "doing business," right? Suck it
up and take it.

------
orthecreedence
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.

------
jonrussell
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.

~~~
gaborcselle
In your post, you say "After news of the API cut off, LinkedIn got in touch to
suggest a possible trip to its San Francisco HQ" - IIRC, LinkedIn's HQ is in
Mountain View, not San Francisco.

~~~
dllthomas
From France, there's not so huge a difference, is there? You're still probably
flying into SFO.

~~~
jayp
A factual error is a factual error. Definitely lowers the credibility of the
article for me.

~~~
eropple
That's a foolish and shortsighted way of looking at it. My company's
headquarters is in Newton, MA, but if we're flying people in to talk, they
universally say "Boston". Because to people not from the area, that's what it
_is_.

Synecdoche is a part of English (San Francisco being the most notable part of
Silicon Valley). It may upset the overly pedantic, but...oh well?

~~~
jayp
I agree with you from the perspective of people of France (or anyone outside
the area). And that point is not lost on me.

I am talking about the credibility of the author. The line referenced in the
article is written by the author. They are not words attributed to others in a
quote. If it's not in a quote, the author takes on the responsibility with
respect to the correctness of the fact. If the author can't verify this simple
fact, I don't know if I can trust the article with all the one-sided claims
presented.

~~~
dllthomas
That they can't be troubled to verify facts that don't have any relevance
whatsoever to the content of the post should only very weakly effect your
expectation of whether they verify facts that are central to the content of
the post. Granted, here on the internet, that's not as high a prior as it
might be.

------
rtcoms
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
??

------
maslam
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!

------
CookWithMe
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.

------
AznHisoka
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.

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

------
tubbo
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.

------
leptons
"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?

~~~
geoka9
Do you think "Microsoft" is stupid? I do. Or "Apple", for that matter.

~~~
anthonyb
Not to mention "leptons"

