Facebook is smart to put off an IPO until 2009: Mark Zuckerberg needs to stay CEO and he’s too young to be a public CEO. Also, the lesson Google taught us was that it’s smart to wait until you are so dominant that you, not Wall Street, can call the shots.
But LinkedIn is another story. The company has been positioning itself for a late ’08 or 2009 IPO, but it needs to move more quickly.
There are three reasons to go public:
- a stock currency for acquisitions, and
- a huge marketing event.
LinkedIn could use the first two, obviously, but what it really needs is the last one. As these traffic numbers from ComScore show, the company was hitting its stride just before Facebook mania stole the national media’s attention–and then traffic growth stagnated.
If LinkedIn acts now, the Facebook effect will be temporary. LinkedIn will never be as popular as Facebook, but when it comes to professional needs like job hunting, it’s a far better tool than Facebook. And LinkedIn actually has a real, profitable business from premium services, a rarity in Web 2.0 and one that could make it more recession proof. Indeed, when 1,000 Yahoos get canned next month, they’re going to need LinkedIn.
So LinkedIn should go public now–and intentionally underprice the stock–before it loses any more mind share to Facebook. An underpriced stock would soar on the first day, prompting every market news organisation on the planet to gawk in amazement (who knew investors thought so highly of LinkedIn!). All the free advertising would drive millions more users, and the golden glow, cash pile, and stock currency would allow LinkedIn to compete far more effectively.
SAI contributor Sarah Lacy has been covering finance and high tech in Silicon Valley for nearly a decade, most recently as a staff reporter for BusinessWeek. Her book on the rise of Web 2.0, Once You’re Lucky, Twice You’re Good, will be published by Gotham Books May 2008. She is co-host of Yahoo! Finance’s TechTicker and writes a biweekly column for BusinessWeek.com called “Valley Girl.”
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