alarm:clock

Social Networking - Monday, January 29, 2007

LinkedIn Worth A Quarter Billion?

As we just posted, Silicon Valley’s Bessemer Venture Partners and the European Founders Fund invested $12.8M in LinkedIn placing a value of more than $250M on the business social network. That's a nice round number. Would Wall Street pay that?

At a party at Stinson Beach recently a couple of tech investment bankers who have been around the block were scratching their heads about the value of LinkedIn. We have heard this refrain before. It seems to us that most people complain about the hassle of LinkedIn. Why spend time maintaining your list and then never use it?

There are two groups of people for whom LinkedIn is of tremendous value: headhunters/recruiters and those looking for a job. The rest of us are just treading water with LinkedIn.

When we told our fellow beach combers that LinkedIn says it is profitable and on track to hit $100M in revenue by 2008, they couldn't believe it. Granted, its bogus to tell the media you are on track to hit a number a year out but even if they hit $50M in 2008 its impressive.

What most people don't realize is that LinkedIn makes money from services. The site's 60K+ recruiters pay an average of $3,600 a year for premium features, specifically sending messages to members outside their own networks. Corporate members like Microsoft pay up six figure fees for access to the network.

It will be interesting to see in yeers to come what network is more valuable - MySpace or LinkedIn. We'd bet on the later. MySpace has competition from all quarters and can really only make a living from Adsense whereas LinkedIn has the biz space to itself and has the premium payment channel.