Learning from LinkedIn


Immediately following the LinkedIn IPO all the excitement was about the share price. Granted, it's a good news story - on a lot of levels. The shares were priced at $45 and opened at $85. Now, as we move into the second month of LNKD being traded on the NYSE and at the time of this writing, the share price is still over $70 - far below its high of over $122, but still better than its initial pricing.

It's also good news for the IPO market  particularly, the Web 2.0 crowd. After all, Facebook and Groupon - among others - are expected to have their IPOs soon and the LinkedIn results augur well for their offerings, too.

The real story behind LinkedIn has more to do with a company that started eight years ago and hung on through thick and thin, building a business as well as an industry.

It's worth remembering that in 2003 there was no such thing as Facebook and job searches came from sites like Monster.com. LinkedIn changed the game, slowly but surely, by positioning itself in a specific niche until it grew from being an interesting idea to a hiring juggernaut that happens to be an excellent and interesting networking platform.

LinkedIn is profitable. With its over 100m users worldwide - with aggressive expansion planned in the near-term in Europe and slightly longer-term in Asia - the company will use the cash infusion to execute further and faster on its existing - and successful - business plan.

In the world of "imitation is the highest form of flattery," the fact that BranchOut recently raised $18m to compete with LinkedIn on the Facebook platform says more about the potential for the professional networking space than almost anything else could.

Reid Hoffman, LinkedIn's co-founder (with Jean-Luc Vaillant) and Executive Chairman, used a technology to build a business. Jeff Weiner, the CEO since 2008, took that technology and built a fast-growing, viable business.

LinkedIn is going to be the poster child for Web 2.0 IPOs. At least for the moment. For the really discerning executive and entrepreneur, the lessons aren't in the share price, but in how a successful business was built.

(Note: An earlier version of this article was published on Technorati.)