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LinkedIn and the Downside of an IPO

By Mark Evans in Social Media No Comments Tags: , , ,

The world is abuzz, aflutter and agog about LinkedIn’s IPO, which saw the price of its shares more than double to $94 from the offering price of $42. LinkedIn is now worth a staggering $8.9-billion, or 40X revenue.

To some people, the LinkedIn IPO harkens back to the original dot-com boom when valuations were sky-high and investors were completely irrational. That may be true but remember most of the IPOs done a decade ago were crappy companies with little or no revenue that played upon the bubbly enthusiasm of this new thing called the Internet. LinkedIn, on the other hand, has revenue, 100 million users and a global brand name. In other words, it has fairly strong fundamentals.

But as people sober up from LinkedIn’s spectacular debut yesterday, here are a few thoughts:

1. The biggest thing about being a publicly-traded company is everything you do is on the table. There are no secrets anymore that can kept behind the scenes like when you’re privately-owned or VC-backed.

At the same time, there are expectations to meet from investors and analysts looking for certain finance results. If you exceed targets, you’re rewarded; if not, you’re penalized. For publicly-traded companies, it puts pressure on them to perform, and may get them to do things such as raise prices or introduce new services to drive revenue.

2. While LinkedIn had strong revenue ($243.1-million), I think companies that don’t have strong revenue will have a more difficult time doing an IPO unless they also have a compelling brand. Facebook could do an IPO in a heartbeat, and I think the enthusiasm among investors would dwarf LinkedIn’s.

Twitter could easily do an IPO based on its user base and brand recognition. The only problem is Twitter’s financial fundamentals may be an issue because it’s still not generating enough revenue. This explains some of the strategic decisions Twitter has made recently.

3. There will likely be a flurry of IPOs as entrepreneurs and, as important, VCs try to take advantage of the LinkedIn IPO to pull some money off the table. My advice to investors is to be pragmatic and careful, and be prepared to get stung if you’re not prepared.

More: The New York Times has a good piece on LinkedIn’s IPO with a great first paragraph: “It’s not 1999, but the big Internet I.P.O. is back.”

Is Twitter Really “Mainstream”?

By Mark Evans in Social Media 2 Comments Tags: , ,

According to Mitch Joel, “Twitter is mainstream”.

With more than 200 million users, there is no doubt Twitter is popular but is it really mainstream? For that matter is Facebook “mainstream” with 660 million users. What about LinkedIn, which has 100 million users?

They’re big numbers but I’m not convinced they’re mainstream because there are still large chunks of the population not using them or not aware of them. (Yes Virginia, there are people who don’t know what a Twitter or tweet is.)

E-mail is mainstream. The Web is mainstream. But Twitter, Facebook, LinkedIn or blogs?

One of the dangers of being within the eye of any hurricane such as social media is our view of the world can be torqued. It is easy for us to believe Twitter is mainstream because everyone around us is using and talking about Twitter.

I’m not suggesting Twitter isn’t popular and being embraced by new groups of users but I’m not sure it’s mainstream…at least, not yet.

Facebook: A Deal with the Data Devil

By Mark Evans in Social Media 6 Comments Tags: , ,

Unlike Julian Assange, I don’t believe Facebook is “the most appalling spy machine that has ever been invited” but I do agree with Niall Harbis Facebok has aggressive ambitions to dominate the Web.

Steadily, Facebook is appearing everywhere all in the name of the social graph. It starts with Facebook Connect making it oh so easy to register or log into a Web site. Then, it’s the “Like” button to show your friends the places you frequent. Facebook rolls out comments to the things you say on a blog can be streamed into your Facebook account. Now “Send” makes it easy to share articles or blog posts with your Facebook friends.

So what’s the end game for Facebook beyond global domination? The simple answer is: data. All the information and content shared and posted on Facebook, the “Likes”, the Facebook comments, “Send”, etc. are sucked into Facebook ever-growing server farms. The more you interact with Facebook directly or via a Facebook tool/widget on another Web site, the more intelligence they have on you – your likes, dislikes, job, favourite Web sites, hobbies, where you go (Places), etc.

By using Facebook to connect with friends and family, you’re making a deal with the data devil. A key part of using this “free” social network is you agree to provide Facebook with all kinds of data. Even if you’re super careful about your privacy settings – something most people don’t think twice about – you’re still providing Facebook with lots of data.

So why does Facebook hungry for your data? It’s simple: revenue. The more information they have about their users, the better job Facebook can do to serve the needs of advertisers who want to target specific groups of consumers. It’s a straightforward but brilliant economic proposition that will drive Facebook’s revenue growth much the same way that AdSense has turned Google into a money-making machine.

For anyone interested in Facebook’s ability to target consumers, go through the process of placing an ad on Facebook. One of the tools is the ability to target based on age, gender, interests, geography and even workplace. All of this information is provided by users, and then used by Facebook to sell ads.

Facebook’s need for more data is a financial necessity because it still needs to convince advertisers that spending money on ads is a smart thing. Facebook is hoping ultra-targeting is a way to get around the problem that many Facebook users ignore the ads because they see it as a way to stay connected with friends and family rather than a way to learn about new products and services.

But if Facebook can deliver super-targeted and relevant advertising, maybe consumers will start to pay more attention.

In the meantime, Facebook will continue its data jihad by rolling out new services that provide value to consumers and, at the same, help the social network collect more data about you. It’s a much more palatable approach than having to focus on privacy settings with far more economic potential.

Could Twitter Get “MySpaced”?

By Mark Evans in Social Media 14 Comments Tags: , , , ,

As difficult as it might be to believe, it was not that long ago that MySpace dominated the social networking market, and made Facebook look like a pipsqueak. MySpace ruled the roost in such a major way that Rupert Murdoch spent nearly $600-million to make it part of his News Corp. empire. Now, MySpace is evaporating before our eyes while Facebook is battling Google for digital dominance.

…which brings us to Twitter, which dominates the micro-blogging world after vanquishing wannabes such as Jaiku and Pownce. Right now, there is no competition to Twitter – not even a weak and feeble MySpace. Instead, Twitter dominates while micro-blogging startups such as Yammer happily operate in the enterprise market.

Even so, there is growing speculation Twitter is about to face new and serious competition. The biggest threat appears to be Bill Gross’ UberMedia, which already has a strong foothold with a portfolio of Twitter applications.

According to CNN, Gross is considering a new, user-friendly service. The service would differentiate itself based on ease-of-use, and allow users to post messages longer than 140 characters.

As well, a group of developers disgruntled about how Twitter changed its API rules have launched rstatus.us, which is billing itself on two concepts: simplicity and openness.

Meanwhile, Twitter continues to search for a business model and ways to better connect and serve its users – something highlighted by GigaOm recently. When there was no threat of competition, Twitter could afford to struggle, knowing that even if it made mistakes, there was no one to capitalize on them.

But now, the landscape seems to be changing. As a result, Twitter no longer seems as impenetrable. While there’s still not a major rival on the horizon, something seems to be different.

The question is whether a new service could challenge Twitter, let alone do what Facebook did to MySpace. Does Twitter have such a dominant hold on the marketplace that it would be very difficult for a new player to make a serious charge?

My take is “no”.

As much as people love Twitter, social media users are fickle, disloyal at the drop of a hat and always looking for the next new and shiny object. If something better, different and more interesting than Twitter came along, it wouldn’t take much for it to attract a lot of attention.

Don’t get me wrong, I don’t expect the masses to abandon Twitter but if Bill Gross can come up with a new and compelling service, anything could happen. It would be a challenge because the barriers to entry are extremely high. One false move, and you’ve got a Color.com, RockMelt or Flock on your hands.

But if you could hit one out of the park right away, watch out. In theory, all you’d need are breathless reviews from a Guy Kawasaki, Robert Scoble, Mike Arrington and Walter Mossberg for a service to go from zero to 60 miles an hour. Once the cool kids deem something to be wonderful, the masses could jump on board hard and fast.

If I were Twitter and its investors, I’d be nervous. The world is good now but there are competitive rumblings. They may not be loud but they exist – something we haven’t heard in a while.

More: For some other coverage about Twitter, check out this TechCrunch story looking at the-sky-is-falling story that appeared in Fortune Magazine.

Facebook Pages Do Not Replace Web Sites

By Mark Evans in Social Media 2 Comments Tags: , ,

I was approached earlier this week by reporter looking at the growing number of companies embracing Facebook Pages. As we went back and forth Q&A via e-mail, I couldn’t help but get the impression the angle he was trying to pursue was how the value or need for a Web site is disappearing.

It’s an interesting idea but it is not something a company should pursue. While there are many benefits to having a Facebook Page, it is not a replacement for a Web site. The biggest reason is a Facebook Page and Web site fill different roles. Together, they form a powerful one-two punch to distribute information and content, and serve target audiences in different ways.

Facebook Pages are sexy, dynamic and a platform to actively engage with consumers; Web sites are solid citizens that provide companies with consistency and a place to deliver information that likely wouldn’t see much reception from Facebook users.

Here’s the biggest reasons why Web sites still matter:

1. Companies don’t own their Facebook Pages. They create them and spend money to enhance and operate them, but Facebook Pages are owned by Facebook. If Facebook wants to change the rules, the interface or the features, they can do it even if a company wants to keep its Facebook Page as is.

2. Web sites are corporate assets they manage and control. Regardless of what happens to Facebook or the whim of Mark Zuckerberg, a Web site serves the needs of a company and provides it with a way to serves it target audiences, not Facebook’s.

3. Web sites can also be social and sexy. There’s no reason why good design and the integration of social media can’t make a Web site more engaging and interesting. A Web site may not have the social appeal as Facebook but it can be a lot more than a place to see senior executive bios and financial reports.

4. A Web site is a content machine, particularly those that have blogs. One of the fundamental pillars of social media is being able to use different services to distribute content. This is where a Web site offers huge value as a resource companies can use to direct people to different content via social media.

5. Simply because Facebook has 600 million users doesn’t mean it will be around for ever or that it serves the needs of everyone. It’s highly unlikely but Facebook could fall out of favour. At the same time, there are Facebook users who may not want to look at corporate information on a Facebook Page. And there are people not on Facebook – as difficult as it may be to believe.

6. There are many people who are unable to access Facebook at work, which means it makes no sense to only have a Facebook Page if it means cutting people off from access to your corporate digital presence.

Bottom line: Facebook Pages are wonderful and useful but they complement a corporate Web site, not replace it.

(Note: This post was originally published on the Sysomos blog.)

Can Facebook Save the Comment?

By Mark Evans in Blogs, Social Media 2 Comments Tags: , , ,

You remember the blog comment? Back in the day, it was the thing to do on social media. What a novelty to opine, correct, rant or inform about a published article in real-time to a global audience.

Then along came Twitter and Facebook, and the comment got shoved into the corner like an old toy with chipped paint and a missing wheel. There have been valiant efforts to resuscitate the comment by start-ups such as Disqus and IntenseDebate but the comment remains a social media second-class citizen (arguably along with the podcast).

But is there new hope for the comment? Does the launch of Facebook Comments mean the comment could regain some of its lost lustre? While it has only been a week since some blogs were able to start using it, Facebook Comments shows interesting and intriguing potential.

Putting aside any issues you may have with Facebook gaining access to even more of your data (no small task given the magnitude of Mark Zuckerberg’s ambitions), Facebook Comments has a real shot of revitalizing the blog comment because it offers a new way to provide it with a universal platform. Rather than being stuck inside a blog post, a Facebook-powered comment benefits from the social clout of that having more than 600 million users offers.

For bloggers, it means the dividend of attracting a comment – no small task in the scheme of things – can be distributed to a much wider audience, who can then discover the comment and, hopefully, click through to the blog. Given comments are one of the things that sustains most bloggers, the ability to use a comment system on steroids is a serious temptation – even if means selling your soul to the devil.

For people who leave comments, Facebook Comments provides a much broader platform to have their opinions seen and read. You have to understand the blog commenter is a strange beast. Not only do they read blog posts but many actually leave insightful commentary. It’s an investment of time and energy, which is why their efforts are so appreciated by bloggers who slog away with little financial reward.

Of course, there is no such thing as a free lunch, and Facebook Comments come with a pretty high price tag. For bloggers, it means surrendering your comment system and its data to Facebook. For commenters, it means there’s no such thing as an anonymous comment. As well, a comment can appear on Facebook as well as other blogs using Facebook Comments so there’s no such thing as just leaving a comment for a particular forum.

Facebook Comments may not be perfect and it may not be the best solution to the plight of the blog comment, but it does illustrate a new approach to bring the blog comment back from the social backwaters.

One final note: You’ll see that I’m not using Facebook Comments despite some of the benefits it offers. Why not? The biggest obstacle is I have little interest in giving more information to Facebook. Second, I want to control and manage my comments, which is I’ve tried and backed away from Disqus and IntenseDebate.

For more thoughts about Facebook Comments, check out TechCrunch, which has has discovered the critics and trolls have strangely disappeared.

Smashing Magazine also has a lengthy and insightful post with the provocative title “Where Have All the Comments Gone?”. Robert Cringely weighs in on how Facebook Comments is another blow to the loss of anonymity on the Web.

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