I wanted to take a quick look into the LinkedIn IPO that Mashable discussed earlier today!
Since LinkedIn seems farther along than Twitter or Facebook at moving their venture forward, I wanted to take a second to discuss how the new LinkedIn IPO will affect how they deliver social networking services in the future.
The big issue to me is when the IPO’s come out, like LinkedIn’s IPO happened only after they were profitable. The revenue issue is a huge one for social networks, as well, because deciding how to set up a revenue model is a huge challenge that a lot of the sites that have relied upon financing will have to address as social networks go public.
Up until now, many of the social networks have kept a tight lid on the numbers. How much does Facebook make a year is not detailed. Additionally, Twitter is just developing their revenue model, so there is no way of knowing how viable it will be in the future. More than likely tweeting will not be profitable in the next year or two as they develop different ways to monetize the 165 million member strong site.
LinkedIn apparently became profitable in 2010 for the first time. Considering the company was started in 2002 that is very interesting for how viable Twitter is in terms of profitability. Facebook has been rumored to be profitable since 2009, and were started in 2004.
Turning to the giant of social networking. Facebook has estimated revenue of $2 Billion and a valuation of $57 Billion. Something does not add up here mathematically. When people put two and two together they will quickly realize that valuing a company that highly, no matter how many members they have, can be a very dangerous sport.
It will be interesting how social networking will change in the next two years as these companies go public and have to start bowing to the wants of investors. Right now more questions arise from LinkedIn’s IPO then answers.