The Missing Link


Anyone with even a cursory interest in the stock market has already heard of the remarkable first-day IPO performance of LinkedIn -- up a startling 109%. Not surprisingly, some pundits and analysts are suggesting this to be a wild over-valuation of the company, with others talking about a new tech bubble forming.

Is LinkedIn over-valued? I'm not going to opine on what its stock price should be, but I will say that I've been a LinkedIn fan since 2004 when Reid Hoffman, LinkedIn's co-founder, spoke at our DataContent Conference. What fascinates me most about LinkedIn is that it has found over $240 million in annual revenues just from the most obvious ways to monetize its data content: contextual advertising, recruiter and executive database subscriptions and a next generation job board.

The less obvious opportunity? Think master data. Do you know anyone who's not listed in LinkedIn? And if someone is not listed, do you find yourself thinking it to be somewhere between odd and suspicious? Further, have you noticed that most people seem to find value in keeping their LinkedIn listings reasonably current, and that a LinkedIn profile with lots of connections is very difficult to fake? Exactly! All the elements for a trusted, central database of business professionals. Think about it. Why circulate your resume if you can send a link to your centrally located resume that tells a lot more about you because it shows the level and extent of your connections? Why keep contact records in salesforce.com that you are forced to maintain, when you can link to a LinkedIn record instead, and the person you are linking to will promptly let you know of promotions, employment changes and more? The list goes on.

LinkedIn is routinely classified as a social media company, but to me (and everyone I talk to), that is actually its weak spot. The big opportunity for LinkedIn is data, pure and simple, leveraged by its huge scale and enough user engagement to keep its database current. In my view, LinkedIn should change its name to LinkedTo, because the biggest opportunity is to get everyone to link to it and rely on it as a shared, central resource.

A contrarian view? Perhaps. And I admit I have been bullish on Open Table for the exact same reason: a latent data play underlying a business most view very differently. My bottom line: for both companies, the best is yet to come.

 [Full disclosure: I currently own no shares in LinkedIn, though not from lack of trying.]

 

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