LinkedIn – Human capital

LinkedIn did some remarkeble things last year. Investors noticed it too. The stock tripled last year and currently this online business network is valued at 25 billion dollar. So after Twitter and Facebook I am touching the surface of LinkedIn potential future and the investment case for LinkedIn.

I hated LInkedIn. It was irritating, not working, not properly designed, yet somehow it got tracktion along the business side. It was a better way to connect than with the paper businesscards. Nothing more than a rolodex 2.0. 

And than some big changes were made last year. Linkedin did something really really good last year. I was always hating this platform during my work at Social Inc.  But now I see endless opportunities in a B2B market that is an the edge of discovering online. Don’t even get me started on social. So much more potential.

But LinkedIn made some important decisions:
– mobile first (and building the mobile environment from the ground up; not looking at the current desktop version of LinkedIn)
– It gave way to more and better updates about business related items. It became more a content platform instead of just a tool for connections.

Somehow they still don’t get LinkedIn groups. and nobody does. It is a mess. You cannot do any good community management on these pages. But i think it is probably on purpose because the focus will become more on the company page instead of communities around a topic. That’s were the money is coming from. Company pages that are relevant and give great content updates. (and Companies will love to advertise these pages).

And that is way different than the other social media platforms: it has currently three revenues streams:

  1. Plain ads
  2. Hiring solutions
  3. Pro accounts

And yet the big B2B market still has to explore and move to these platforms.
Yes LinkedIn is also really expensive on the stockmarket. But somehow I see so much more potential in this environment. Human resources and toptalent will become scarce, or better. There will be a bigger fight for talent because of the transparency networks bring along. And this ‘fight’ between companies can be in LinkedIn advantage. Take the demographics of all the working force you can add to you advantage for your sales department and two major markets can be mined.

Current numbers are:

linkedin members

Out of 600 mln professionals worldwide available at this very moment.

Next year estimates for the LinkedIn company are ‘only’ just more than 2 billions in sales. and EPS (Earnings per share) of 2.20. which calculates back to a lot of future promises that are already discounted into the shareprice paying 100 times the profit of next year. Or to put it in other way: only getting a 1% return on your investment.

I know we Dutch were the first to take advantage and rank high amogst LinkedIn users, always eager to do some business and making connections. But to see the rest of the business world also connecting is really good. I don’t have a good view of what is happening in Asia but in the US & Europe there is now real compititor except Facebook (nNot that business minded) or Xing (slowly dying out in German territory).

What makes LinkedIn worth the 25 billion dollar? The richest part of the working class is on this platform.  People on this platform will not switch that easily like other social media platforms. And LinkedIn developed several different revenue streams. That makes a really good total package. And I have got the feeling that focus is an the long term, like Amazon.

Seeing these figures i might buy some shares these days, although I missed out a really big ride. There is still a lot of potential left I guess with LinkedIn members currently valued at the same valuation as Facebook.
(That is crazy, best thing to do is short Facebook and go long LinkedIn – be market neutral with these high levels of valuation)

See the full LinkedIn vision and potential here in this slideshare (also owned by LinkedIn);

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