Will LinkedIn IPO in 2011?

According to sources at Reuters, the professional networking platform, LinkedIn, is considering going public in 2011. But is this the right move at the right time for LinkedIn? I guess it depends on the amount of risk that LinkedIn wants to take.

In the post by Reuters, it mentions that one of the sources said like some of the other social networking platforms, they want to beat Facebook to going public. The reason; no one ever remembers who comes in second place. I don’t think this is a good reason to go public.

I am sure there are a number of advantages and disadvantages to going public. I am sure that one big advantage would be giving their investors a return on the piles of cash they loaned out. That is always a good thing! But one big disadvantage may be the public’s need to consistently see innovations and new products every earning cycle. Today’s trader had a remote control in their hand with their finger on the “on-demand button.” If they do not like what they see when they want to see it, they will change the channel and sell off.

If LinkedIn does go public they will have one particular advantage over Facebook; reoccurring revenue from membership fees. Last time I checked Facebook does not have a paid-membership option. However, Facebook is making money off of ad revenue. But this is not reoccurring and can be difficult to forecast, especially if ads look like crap and no one clicks on them. LinkedIn actually has a pretty good ad platform that targets real professionals and decision makers. Facebook can target a demographic but when you are in B2B sales, LinkedIn is the place to be.

Personally, I recommend that LinkedIn stay private and continue to develop services and products that their 85 million users would potentially pay for. I also recommend that they continue to expand their API to allow more integrations with third party platforms. This is an area that Facebook and Twitter have thrived in.

1 Comment

  • Donna

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