Today, a big buzz around the social business circles is the news that LinkedIn may decide to do its IPO in 2011. LinkedIn is the premier social networking service connecting professionals and workers from many industries, companies, and markets. In the news today, January 6, 2011, Reuters, quoting unidentified sources, reports that LinkedIn has hired Morgan Stanley (MS), Bank of America (BAC), and JPMorgan (JPM) to handle the underwriting duties for an IPO. News Services report than LinkedIn has a market capitalization of around $2.2 Billion dollars.
The evolution of the Internet Company Landscape…
I see this as a important barometer for financial acceptance of Social Businesses or Internet\Web 3.0 businesses, similar to how Google’s IPO helped propel exciting new Internet Technologies such as the Cloud Computing models, Search, and search-based Ad revenue into mainstream business models, and translate these activities into huge top-line revenues and strong per share pricing. Originally priced at $85 each almost 8 years ago, Google’s shares soared past $600, closing at $609.50 on January 5th, 2011. Google’s market capitalization today stands at $194.77 Billion. Google is the king of the “new” Internet 2.0 companies, displacing old timers, Internet 1.0 stalwarts like Microsoft, Cisco, Yahoo, and Oracle. With a successful IPO of LinkedIn, I see the potential for a new paradigm emerging of the Internet\Web 3.0 companies. Linking Social Capabilities with applications for both mobile devices and traditional PCs. Facebook raised $500 million through deals with investor Goldman Sachs and Digital Sky Technologies, a Russian investment firm that has already invested about $500 million in Facebook, according to a New York Times report. The report notes the investments give Facebook a greater value than Web pioneers Yahoo and eBay. Facebook has by many accounts over 600 million users, which puts it in a very powerful position to provide more than just pictures, videos, and status updates for those millions of users. Facebook could wield huge influence over how people experience the Social Web, and direct billions if not trillions of dollars to retailers and assorted companies.
Three years ago, LinkedIn partnered with Huddle to broaden its platform’s functionality to include social networking, , enhanced profiles, and a recommendation engine, while positioning itself to dominate the future employment market. I see LinkedIn partnering with one of the employment sites, like Monster or CareerBuilder to take the employment search experience to a new level. As for the social platform at LinkedIn, I am not sure if LinkedIn still uses Huddle as its Social platform core, but clearly the move has paid off for LinkedIn, as it now is much more relevant for professionals, and has permeated the workplace in many companies. Clearly, Social has now become the new bubble in the investment community, with companies lining up with various Venture Capitalist firms to finance their expansion and gobbling up smaller key players to shore-up their business offerings.
What does this mean for Social in companies?
I think a successful IPO for LinkedIn has direct and indirect benefits for all things Social. Direct benefits would be the ability for many investors of privately held Social companies to have some promise of large market capitalization feeding off the frenzy IPOs from Facebook, LinkedIn, and Twitter. Another Direct benefit would be the enterprise Social companies to gain greater traction selling social-leaning applications, opening up additional revenue generating opportunities. Indirect benefits to successful consumer-Social IPO revolve around Enterprise 2.0 companies like Jive Engage, Yammer, SocialText, and others to become “mainstream” in discussion of senior company leaders. The buzz around the successful IPOs for consumer social would have an effect on bringing the “Socialization”, or Enterprise 2.0 capabilities to the forefront of company’s strategic planning.
Better to stay Private?
Harvard Business Review published an article detailing why perhaps companies like Facebook, LinkedIn, Twitter may want to stay private. Disclosing financial information and operational procedures\processes are leading reasons not to become publically traded in todays’ over regulated world. Falling under the scrutiny of the SEC, and having to deal with all the regulatory hurdles could stall these IPOs, but looking at the IPO of Google, who did have a hugely successful IPO, could make the choice sweeter for Socially leaning companies.