The grey guy of networking learns to mix it with the poster boys

At the great internet drinks party, LinkedIn had been looking decidedly like a social wall- flower. Over the past three years MySpace had stormed centre-stage with its 60 million following of spotty teenage music fans and unsigned bands. Its preppy emulator Facebook had also turned many heads, while LinkedIn lurked quietly in the corner sipping mineral water and checking its watch. Known as "the MySpace for grown-ups", the business networking site in executive colours of grey and blue looked dull set against the virtual pie-throwing on Facebook and garish wallpaper on MySpace.

That was, until last November, when Silicon Valley was awash with rumours that Rupert Murdoch was thinking of making an offer for it.

Last year there was a quiet revolution in the fortunes of LinkedIn. It had been languishing on eight million users, and among those were a large number of inactive profiles. But when new chief executive Dan Nye rode into town, the buzz began and the BlackBerry classes turned on. With a few tweaks to the site, Nye has nearly doubled the number of users and become the talk of Palo Alto.

LinkedIn was founded by Reid Hoffman, one of the original PayPal team. He chose to step aside last February and appointed Nye in his place. Formerly a brand manager at Proctor & Gamble and an executive at computer software company Advent, Nye arrived with grand plans about attracting new users, expanding into Britain and continental Europe, and encouraging company memberships.

The vision became a reality, with the slow, steady assault on the business community gathering momentum throughout 2007. Top-tier American business people have begun posting CVs on their profile pages en masse, recommending colleagues to each other, hiring, networking and getting feeds from business magazines. Democrat presidential candidates Barack Obama and Hillary Clinton (pictured below) have rival pages, and singer James Blunt has been using it to promote the Doctors without Borders charity.

Now the British, proud of being less brazen than their American counterparts, have begun to bite. In November the UK hit one million users. Invitations to join LinkedIn from the well-connected have begun to arrive in people's inboxes, with qualifiers like "I know this seems a bit naff but ..." The site now claims to have 9 per cent of the professional workforce signed up and boasts an executive from nearly every FTSE 100 company on its books. Cond Nast recently used a Vogue article to praise Facebook, but Duncan Edwards, managing director of rival publisher NatMags, has chosen LinkedIn as his networking site.

Nye puts it down to the old school tie born of Friends Reunited. "The network has taken off and we haven't done anything to promote it," he says "When we were over there, we asked the British why they loved LinkedIn so much. I got some great answers. Friends Reunited was a pretty big thing for a while and it sounds like it played a role in training people locally."

Adept at turning a negative into a positive, he also believes that the starchiness of the site suits our national temperament. "Many people in the British focus groups thought LinkedIn was a UK company," he says. "It is designed as a very professional, reserved, low-key site, as opposed to something that is full of advertisements the loud view that many people have of America. Because it's more formal and they are reading British English, they ended up valuing it as a local product."

After the boom in take-up over the past year, LinkedIn is to open a new European headquarters in London this month, and Nye has high hopes that it will move into general parlance in the same way as Facebook and MySpace; the phrases "critical mass" and "tipping point" crop up frequently in his conversation. But LinkedIn still has far to go, with 17 million users against Facebook's 60 million.

There is, though, a dogged persistence about it. "We think we are earning each member one at a time," says Nye. And what it does have on its side is a tip-top demographic. "The average age of our users is 41 and they have an income of over $100,000 [51,000]. If we wanted LinkedIn to take off tomorrow, and just valued ourselves for the number of users, we would put photo-sharing on the site something proven to drive activity levels. We haven't."

The site currently makes money from a mix of advertising, senior job postings, subscriptions to its higher-level tools and corporate sales. It turned its first profit last year and is expecting to record revenues of around $75m to $100m for this financial year. Facebook is only expected to post $30m in income.

The strategy now is to build on corporate sales so entire companies sign up for membership. That is not quite earning members one by one, more like a block vote. However, LinkedIn can position itself as socially acceptable in the workplace something its rivals cannot do. Indeed, Facebook regularly finds itself banned from offices.

Nye won't be drawn on specific companies that have signed up but says there are a number from the Fortune 500. "LinkedIn gives them the ability to tap in to their employees' social capital," he explains. "The companies that buy from us are the kind of companies you want to work for. They see the value of using it as a recruiting tool and a collaboration tool. These are companies that don't feel threatened."

No business really gets taken seriously until the Goliaths of the media and technology scene start waving their chequebooks about, but Nye is adamant that the site should stay independent so it can continue its growth plans. That, though, did not stop speculation in November that Murdoch was in talks about a buyout at the giddy price of $1bn.

Nye laughs off any questions about his communications with the media mogul. "LinkedIn is where professionals are spending the day and our demographic matches the Financial Times or The Wall Street Journal," he says. "So if you are a publisher of a business magazine or website and looking to extend beyond the borders of your primary countries, this is the way to ensure that you provide value in your brand."

A buyout is not beyond the realms of imagination, though. Murdoch saw the value of networking early, buying up Myspace in 2005 for $580m when it had 14 million active users. Now that he has just completed the $5bn purchase of The Wall Street Journal, a site like LinkedIn, primarily populated by the business community, could be a natural marriage.

What would seem more probable, however, is that The Wall Street Journal enters a partnership with LinkedIn just as BusinessWeek has done. The magazine has been one of the first to use the new platforms on the site to bring its news stories to the attention of a wider audience.

Nye is realistic that LinkedIn can't take on the role of social networking for personal relationships. "I'm on Facebook too you can see me driving my truck," he happily admits. "You can only see the back of my head but there I am. I'm connected to my 15-year-old nephew. He pokes me and I write on his wall."

But can the British, the most ardent users of social networking in Europe, move from the casual and slightly ironic use of Facebook and Friends Reunited into the serious world of LinkedIn in significant numbers? Nye's challenge in the coming year will be more than just gaining users in this country; it will be changing the culture of the way we use networking sites.