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A regularly updated resource of information and news items.

Archive for January 2011

LinkedIn’s IPO: An Overview

Posted Friday, January 28th, 2011

It’s official: LinkedIn’s long-awaited IPO is coming soon. Earlier today, the business and social network filed paperwork with the SEC. While the document doesn’t reveal three important pieces of information — the price, date or number of shares for the offering — LinkedIn did reveal a lot of other interesting details.

We’ve had a chance to comb through LinkedIn’s IPO paperwork and dig into the numbers. We’ve pulled some of the most relevant information from its S-1 and posted it here for your convenience.

Here is our overview of LinkedIn and its IPO:
IPO Details

LinkedIn revealed that its “proposed maximum aggregate offering price” — the amount it is hoping to raise — is $175 million. Due to its status as a high-profile Internet IPO, our bet is that LinkedIn will be able to raise more than that when it eventually has its initial public offering.

Morgan Stanley & Co. will be the lead underwriter for the IPO. It will be joined by Merrill Lynch, Allen & Company and UBS Securities.

LinkedIn decided not to disclose the target price for its IPO or the date, though it will almost certainly occur before the end of 2011. According to SharesPost, a secondary market for trading shares in private companies, LinkedIn is worth $2.51 billion. That number will likely rise as the IPO approaches.
Key Financial Numbers

For the first time, we have a clear insight into LinkedIn’s financial health, and overall it is strong. The social network was able to double is 2009 revenues to $161.4 million in the first nine months of 2010, led by increased revenue from advertising and job listings.

We also learned that 2010 is the first year LinkedIn was profitable. While an income of $10.1 million isn’t that strong for a multi-billion dollar company, LinkedIn is definitely going in the right direction:

■Net revenue, Jan-Sept 2010: $161.4 million
■Net revenue, 2009: $80.8 million
■Total expenses, Jan-Sept 2010: $148.9 million
■Total expenses, 2009: $84.1 million
■Net income (after tax), Jan-Sept 2010: $10.1 million
■Net income (after tax), 2009: -$3.4 million
■Cash on hand (as of Sept 30, 2010): $89.6 million
■Total assets (as of Sept 30, 2010): $197 million
In addition, LinkedIn revealed its revenue breakdown. In Jan-Sept 2010, LinkedIn earned $161.4 million in revenue from three products: hiring solutions (job listings), marketing solutions (advertising) and premium subscriptions.

Here’s the breakdown:

■Job listings, Jan-Sept 2010: $65.9 million (41% of revenue)
■Job listings, 2009: $23.75 million (29% of revenue)
■Advertising, Jan-Sept 2010:$51.37 million (32% of revenue)
■Advertising, 2009: $23.8 million (30% of revenue)
■Premium subscriptions, Jan-Sept 2010: $44.1 million (27% of revenue)
■Premium subscriptions, 2009: $33.2 million (41% of revenue)

LinkedIn Metrics

In addition to the financial numbers, LinkedIn also released information about the health of its platform. LinkedIn revealed that it gains a new member every second and now has over 90 million total members worldwide, 40 million in the U.S. and 50 million internationally. That is up from the 55.1 million members it had in 2009.

Here are a few key numbers you should know:

■Registered users: 90 million (as of December 31, 2010)
■Unique visitors: 65 million (average of Oct, Nov and Dec)
■Pageviews: 5.5 billion (average of Oct, Nov and Dec)
■Employees: 990 (as of December 31, 2010)

Top Investors and Shareholders

As part of its S-1, LinkedIn had to reveal any shareholders with more than a 5% stake in the company. It also had to reveal the ownership stakes of its executive officers and directors.

As expected, Reid Hoffman, the founder and chairman, owns the largest share of the company (along with his wife) at 21.4%. The three next biggest shareholders are venture capital firms Sequoia Capital, Greylock Partners and Bessemer Venture Partners. Together, they own approximately 39% of the company.

The following is a list of LinkedIn shareholders with more than a 1% stake in the company:

■Reid Hoffman and Michelle Yee: 19,066,032 shares, 21.4% ownership.
■Sequoia Capital: 16,840,309 shares, 18.9% ownership.
■Greylock Partners: 14,047,978 shares, 15.8% ownership.
■Bessemer Venture Partners: 4,578,253 shares, 5.1% ownership.
■Jeffrey Winer, CEO: 3,844,512 shares, 4.1% ownership.
■Steven Sordello, CFO: 1,007,327 shares, 1.1% ownership.
■Dipchand “Deep” Nishar, VP Product & User Experience 970,000 shares, 1.1% ownership.


The new corporate must-have: the social media manager

Posted Wednesday, January 19th, 2011

Over the past couple of years, an entirely new kind of executive has begun to appear in the upper echelons of US corporations: the social media strategist. Some 200 major US businesses now employ such a person.

If you want to understand why, just look at what befell Sarah Palin last week. She’s not a corporation exactly, but her recent adventures in social media have been salutary – showing why engaging with people online can be such a double-edged sword.

Since emerging on the national scene, Palin has used social media like Twitter and Facebook to rally her core supporters, with a fair degree of success. But then she got embroiled in the aftermath of the horrific shooting of US Congresswoman Gabrielle Giffords in Tucson, Arizona earlier this month.

Palin‘s first mistake was to allow an employee to claim on the day of the shooting that a poster her campaign created last year and which featured gun sights superimposed on locations where she hoped to help defeat Democrat incumbents in fact depicted “surveyor’s marks”.

That explanation was quickly de-bunked when journalists found an old tweet of Palin‘s referring to the map as featuring “bull’s-eyes”, leaving Team Sarah to appear either shiftless or guilt-ridden. Next, more than 350,000 people raced to US expat Karin Robinson’s ObamaLondon blog to read how negative comments on Palin’s Facebook page were being erased in almost real time – but not before Robinson was able to copy the original posts and share them with the world.

Then, last Wednesday, Palin posted a video to Facebook defending herself from accusations of inciting political violence and accusing her detractors of perpetrating a “blood libel” against her – a term widely construed as being either shockingly ignorant or grossly insensitive, or both.
It added up to a nightmare week for the possible 2012 presidential candidate – and should give pause to anyone concerned with their online reputations.

Most US corporations, of course, care very much about their reputations and many will be thankful to feel at least a step ahead of Palin when it comes to managing their presences in the complex new social media world.

But they are only a small step ahead. The confluence of social media with the long memories of online search engines has dramatically altered how national conversations about politics, or products – or oil spills – now run. So it’s hardly surprising that the people whom companies have been hiring to try to influence such conversations are making up a lot of what they are doing as they go along.

Among the challenges they face is the potential for anything anyone said months or even years ago to return and haunt the speaker. It used to be that your critics had to keep archives of the right press clippings or spend a lot of time in a video library to find material relevant to their cause. Not so today.

It’s never been easier to “prove” someone’s hypocrisy by exposing inconsistencies between what they say now and their comments in the past.
Tweets, meanwhile, can seem ephemeral, but once sent are all but impossible to repress. And, as Karin Robinson deftly illustrated last week, Facebook comments are tricky to edit quietly when you suddenly start getting trashed for something you’ve done.

In the wake of Palin’s (and others’) mass online editing following the Tucson shooting, CBS Business writer Erik Sherman wrote: “Executives need to understand that social media isn’t a trivial plaything to be used on a whim. They need strategy as well as tactics, and the tools and sophisticated business processes to control them.”

Establishing such a strategy is the corporate Social Media Strategist’s main job. Distinct from traditional roles in marketing, advertising or corporate communications, the position also requires a comprehensive understanding of how social media change the overall media equation for businesses, an ability to prevent everyone from senior executives to low-level employees from blogging or tweeting things they (or the company) will one day regret, and the foresight to know what those things might be.

Many such strategists also run their company’s corporate blog and Twitter feed. That makes them public figures in the way that only CEOs or paid celebrity endorsers used to be. Take Scott Monty, head of social media at Ford, for instance. He has nearly 50,000 followers on Twitter.

“This role will become pervasive in the coming years, just as leaders who manage the corporate website have become essential,” believes Jeremiah Owyang, a technical analyst who began noting corporate hiring in social media back in 2007 and has been tracking it ever since.

While it can easily pay a cool $150,000 (£94,500) salary, Owyang calls the job of social media strategist “deceptively challenging”. That’s partly because corporate leaders are often clueless about what the job actually entails or why they need to listen to the person occupying it.

It’s also hard to measure the value such positions add – at least until you have a full-scale social media brand disaster on your hands.

Many hired into these roles are online marketing experts. And yet “most social strategists and their programmes lack maturity”, concludes Owyang in a recent report. To succeed, they’ll need be highly strategic in their thinking, he writes, or risk relegation to “the social media help desk”.

The repercussions for their employers can be worse. A brand disaster is pretty much how you could describe Palin’s recent online experience – a performance variously described as poorly-timed, tone-deaf, offensive, shameless, self-pitying, and anti-semitic. Others have speculated that her actions were calculatedly divisive.

But companies would be wiser to view Palin’s as a textbook case of what not to do – and hire themselves a social media strategist quick.


The biggest new website you’ve probably not heard of

Posted Thursday, January 13th, 2011

Quora is a question-and-answer site- much like Yahoo answers or Google groups. Whatever your question, type it in the search box and, if there isn’t already an answer there, users will attempt to answer it.

Why is it suddenly so popular? Because people have noticed that it has a strong preponderance of Silicon Valley’s finest among its users, and that influential people are also using it: Steve Case, the co-founder and former chief executive of AOL, is among those asking and answering questions – any question you like – on the site.

One point that marks Quora out from most other question-and-answer sites, such as the longstanding Yahoo Answers, or WikiAnswers, is that users are expected to use their real names – often derived from Facebook or Twitter. The challenge, Cheever says, is to keep the quality high while growing the site into the mainstream. “Right now, most of the content on Quora is very good,” Cheever told the San Jose Mercury News: “It’s very thoughtful and well written. So as we keep growing, how do we maintain that quality? There’s no one answer.”

Even Google‘s head designer, Irene Au, waded in, saying how much she admired the site’s design. “That’s been a very successful design, not only visually, but also for interaction,” she told the audience at a Zurb design and interaction talk on 27 December. “For a Q&A site, it didn’t turn into a Yahoo Answers with spammy answers. There’s a lot of really rich, high-quality content there. It’s one of my favourite sites to visit on a daily basis now.”

Ehow recorded 90m users and WikiAnswers 81m. The well-publicised, editorial-style Q&A site Mahalo recorded only 8m, according to comScore, and the teen favourite Formspring 958,000.

So far Quora, with a staff of just 12 people, has received $11m in financing, and was valued at $100m in its first round of funding.

How to use Quora
• Register. You can do this using your Facebook profile or Twitter profile.

• Start asking a question by typing in the search box at the top right. You’ll start seeing suggestions for questions that have already been asked (and possibly answered) begin to grow and change as your query continues. Want to know how making red wine differs from the process for white? Here you go.

• If you can add your own answer to an unanswered question, or improve on an already-answered one, do so by adding your own response.

• If you think an answer has been too highly or too lowly ranked, click it up or down. The best answers should therefore rise to the top.

• Start finding people to ‘follow’ by using Facebook and Twitter connections.


Why Marketing Threatens the True Promise of Social Media

Posted Thursday, January 6th, 2011

06 January 2011, Mashable

Social media is everywhere, and it is finally accepted as much as, well, as much as the Internet itself. Sadly, though, in reaching this level of ubiquity, we have ended up surrendering the real promise of this medium.

I fought for so many years to convince people that the Net was a social medium in the first place. Until recently, everybody seemed to believe that “content is king,” and that all this messy socializing between people was of little value. It was all about getting people onto a sticky website so they’d make purchases. Their conversations and innermost thoughts were once considered utterly un-monetizable.

But thanks to Twitter, YouTube and Facebook, social media has arrived as a justifiable expense for businesses looking to do whatever it is that’s intended to replace advertising. And as a result, people who should know better -– many of us who have some understanding of how social media actually works –- are busy working for companies who want to turn this social landscape back into a marketplace.

This isn’t about pointing fingers or laying blame. It’s about stopping ourselves before it is too late. We still have a chance for social media to generate the biggest change in how culture and commerce operate since the invention of the printing press. But it will require that we recognize what is so special about it, how it disrupts the status quo, and why it’d be such a shame to give all this up without a fight.

A Historic Opportunity

The most disruptive feature of social media is that it allows us to connect with one another relatively directly. (Even Facebook’s architecture of central servers is completely unnecessary for social networking to occur, as new tools like Diaspora are quickly demonstrating.) The direct connection via media –- for socializing, or even for commerce — has been controlled by both governments and businesses for the past 600 years. That’s right: This is our best opportunity in six centuries to connect with our peers via technology without the oversight of powerful interests.

After the fall of the Roman Republic, Europeans spent close to a thousand years living under the awful oppression of feudalism. There were lords who owned all the land and peasants who worked on it.

Nothing much happened until merchants started traveling around and spreading the innovations from one area to another. People became good at particular crafts and started selling things to one another, developing little marketplaces that slowly grew in size. Towns developed their own currencies based on grain and other commodities, and people started to get rich.

They had liberated themselves from absolute dependence on the landowners and created a peer-to-peer economy. They got healthy, bigger than at any time in history until the 1980s, and they worked less than four days a week. As a result of the rise of this new “bourgeoisie,” the lords had less power and money. They decided to crash this new economy.

Local moneys were declared illegal; people had to borrow “coin of the realm” from the central treasury. And if that wasn’t enough, local business was also stifled. Instead of working for themselves, people had to become “employees” of one of the king’s officially sanctioned monopolies — what we would today consider “corporations.” People got poor, conditions got worse, the plague broke out … you know the rest. We call it the Renaissance, but it was really the end of a peer-to-peer culture and economy that has never been matched. Until now.

The Potential for True Peer-to-Peer Culture

With the web — and more specifically, with social media — we have the chance to engage with one another in the ways that could restore a P2P society in which people create and exchange value directly with one another. Instead of depending on corporations for jobs, goods, and even investment, we can work for and with one another. Instead of relating indirectly through centrally constructed mythologies and brands (you’re a fan of Nike, too?!) we can relate directly with one another.

The real possibilities of social media, however, are quickly devolving to the limited applications of social marketing. In the past 20 years, I watched open source get reduced to the corporate-friendly concept of “crowd sourcing,” and my own concept of “viral media” get watered down to “viral marketing.” I refuse to watch the social promise of interactive media get redefined by those hoping to make a fast buck off our Facebook friendships. Not without a fight.

Instead of connecting to one another, we are increasingly connected to and friended by the same old brands and institutions that the Internet once stood a chance of upending. And worst of all, we the people are getting into the act, learning to sell our friends to the highest bidder. Whether it’s a Zynga game inviting us to turn over our address books for points, or an advertiser offering us a chance to win a prize for “friending” them publicly, we are now in the business of marketing our friendships to those who hope to exploit the bonds we have created with others. In doing so, we reduce the real value of those bonds, as well as the entire potential for peer-to-peer connection.

Conclusion

The real opportunity of social networking looks a lot more like Burning Man and WikiLeaks than it does like P&G’s word-of-mouth campaign or whatever Twitter is hatching in its new analytics lab.

We are building the social organism together. That’s all the Internet has been doing from the beginning. But it seems as soon as we develop a new tool or strand of connectivity, it is hijacked by business, robbed of its power, and then replaced by mechanisms that connect us to things, rather than people.

Will social networking finally accomplish the Internet’s real goal? We have yet to see. But in the meantime, how we use it — and what we think it to be — will go a long way toward determining its fate.


 
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