October 25, 2007 |
The latest issue of Newsweek features an interview by Steven Levy with LinkedIn CEO Dan Nye . Apart from being a standard Q&A, filled with talk about the meaning and status of the company, it shed some light on a question many have asked the heads of various online social networking institutions in weeks past. The question being: Sale or IPO?
If you wish to know Nye’s answer to the question (which came thanks Levy’s persistence on the subject), it’s pretty simple: an IPO for LinkedIn is quite likely. But why is it likely? Is LinkedIn’s purported fate unique in the industry it inhabits?
Looking at LinkedIn’s stats, one can easily see the reason for an IPO. It’s a profitable operation, for one. And the company’s strategy is measured, in that it’s not given to making swift and major changes/additions/whathaveyou, which no doubt offers an impression of stability and reason at the executive end. Despite the erratic behavior of Wall Street as of late, investors do favor rock-solidness to non-rock-solidness. So, yes, an IPO is very much in the cards for LinkedIn.
Will others follow? Will Facebook stay single and head out to face the bulls and the bears? It’s hard to say. Facebook today looks like one big juggling act whose “long tail” seems to be growing more rapidly each and every month. Surely, its pace can’t be sustained. So does it head market while it’s still hot, or does a body larger than itself try to take it for all its “worth”?
There’s been a good deal of talk of Facebook evolving to become serious competitor to LinkedIn on the business-specific side of the social networking spectrum. Though I myself consider Facebook at best to one part casual collegiate hangout and one part semi-professional tool, and LinkedIn to be the place where professional/business are made on the Web, I certainly do nonetheless recognized Facebook’s push into the world where briefcases and three-piece suits reign supreme. It’s made quite an imprint in this particular segment already. (Nye considers the two businesses inherently different, but the similarities are too many to deny.)
Because the onslaught of Facebook is quite noticeable, LinkedIn might wish to beef up its image considerably more with a stock sale, in order to maintain its edge – an edge it’s held for a number of years. Such a move would be a quick way to get the hefty infusion needed to put development into overdrive and to grow and expand on its user base of 15 million. (7.5 million more than was recorded for the site in 2006, FYI.)
Whatever LinkedIn’s next move might be, it’s clear that Facebook is trying to get every possible “face” it can get – while the getting’s still good. It’s going after MySpace’s dominant place in the networking market as a whole, and at the same time making moves into the professional sector. The company (Facebook) certainly won’t be able to have all it desires. But as a purely defensive move, LinkedIn might want to consider prepping for an IPO soon, in order to protect its interests. Which, I might add, are pretty effing significant for sure.