LinkedIn's CEO departs, executive shuffle ensues

A familiar face is returning to the top spot at professional networking site LinkedIn. Chief executive Dan Nye is leaving the company, while founder Reid Hoffman (pictured) is taking his place.

The official line, according to the Los Angeles Times, is that the shuffle was brought on by hiring Google executive Dipchand “Deep” Nishar to take over product strategy, a role previously held by Hoffman. It’s hard to believe that’s the full story — why the heck would hiring a vice president of product cause the CEO to step down? We haven’t been able to speak to LinkedIn yet, but Hoffman sent us a short email saying the switch was planned.

It’s also hard to see Hoffman’s return to the lead position as completely positive. He’s a respected entrepreneur, but there’s a reason why founders usually keep the CEO office as their companies grow. The last time a prominent founder returned to serve as CEO was Jerry Yang at Yahoo, and that didn’t turn out so well. LinkedIn may be grooming Yahoo’s Jeff Weiner, who was just brought on as LinkedIn’s president, to eventually take over. (Some say Weiner has a mixed record at Yahoo.)

LinkedIn has been trying different ways to make its site more engaging, including the launch of its developer platform. However, it has failed to become the sort of network that people use daily, to interact with others on a regular basis. It’s mostly used for temporary networking, such as job searches, less for sharing information about activity with friends, which Facebook and other networks has become known for. Last month, the company announced it was laying off 10 percent of its workforce last month.

The question remains why is this switch happening now? Does it suggest investors aren’t happy with the company’s direction? David Sze, an investor with Greylock, declined comment, saying the company had directed him to let the company handle communication about this. If LinkedIn does stumble, it will join two other early well-known social networks, Friendster and Tribe, both of which got early traction but lost their leadership positions.

It’s also worth noting that LinkedIn’s competitor in Europe, Xing, recently saw its chief executive Lars Hinrichs step down too.