Professional networking site LinkedInjust earned a $1 billion dollar-plus valuation, raising $53 million from a group of VCs led by Bain Capital, for about five percent of the company, giving it a valuation of $1 billion plus.
Though there has been talk of LinkedIn making a good acquisition target the company's CEO, Dan Nye, says they're going solo. The company has been profitable since 2006, and this year will revenue between $75 million and $100 million, more than double last year. The company is tiny--just 23 million users--compared to the likes of MySpace--which hit 100 million users in 2006, and Facebook, which currently has 80 million plus users.
But LinkedIn does have its advantages over these other services. It's adding a million new members each month. And the company knows they're all of a certain educated, somewhat affluent demographic, which makes it easier to work with advertisers. And while Facebook's$15 billion valuation dwarfs LinkedIn's new value, it's still impressive, and almost surprising in this economic environment.
There's no question that social networking has been hot over the past few years. When Microsoft's $240 million investment in Facebook gave that site a $15 billion dollar valuation, more than a couple people wondered if the fast-growing and innovative site could figure out a model to generate the kind of revenues to justify such a pricetag.
During all this drama, Facebook's less glamorous stepsister, professional networking site, LinkedIn was hard at work chugging away. One thing's for sure: while the social networks still haven't figured out how to monetize their huge numbers of users, the primary professional network, is doing a good job with their more modest numbers.
I've interviewed the company's founder, Reid Hoffman a number of times and have always enjoyed his perspective and focus on the business network as opposied to the flashier alternative. A veteran of PayPal (now owned by eBay ) he's always seen the company as more than just a networking company -- in addition to carriying ads for jobs, it offers a premium subscription service for which it charges. It also offers corporate recruiters a service to help them manage their recruiting on the site.
What now? More applications. And LinkedIn could go public within the next few years, if it's not snatched up before then. Many say Microsoftis a natural match, though we'll see.
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