So Why Is LinkedIn An IPO Standout?

Earlier this morning at D10 KPCB analyst Mary Meeker showed a pretty definitive slide about the current state of the public markets with regards to tech companies. “The private market is in a bubble,” Meeker said, “We have a $1 billion fund, and didn’t invest once in Q1 because the valuation’s too crazy.”

The problem with these valuations is that public market investors are more skeptical, Meeker asserted bringing up the above slide comparing the IPOs of Facebook, Zynga, Groupon, Pandora and LinkedIn. Because of this skepticism their valuations are suppressed, almost all were trading at 20% lower than their initial IPO pricing, all except LinkedIn that is. The public market has taken kindly to the career focused social network, which is currently trading at $100 a share, 137% above its strike price of $32.

Kara Swisher had the opportunity to ask LinkedIn founder Reid Hoffman and CEO Jeff Weiner why they thought the company was doing so well later today, dubbing it the “Little LinkedIn That Could”. Their answer?

Hoffman said part of the company’s success was only focusing on the long-term, “I only look at the stock price once a month, it’s doesn’t really affect what are we building towards. Weiner said that companies were often to focused on IPO events with companies being criticized for talking too much or too little, etc.

“People remember what the weather was like on their wedding day, but it has little impact on the long-term health of their marriage,” he went on, referring to the IPO as a stepping stone.

Reid added, “The difference from everybody else is that we focus on our business, which why we’ve been able to execute. We have a sense of purpose and extremely amazing talent.”

Okay, so this is what everyone says (Zuckerberg also has said that he doesn’t pay attention to the market) so what’s the real reason? Perhaps because, as Matthew Prince brings up on Twitter, LinkedIn is as viral/sticky as Facebook but with 1) ads that monetize well; 2) a vibrant subscription business; and 3) proven management.

So while it’s more boring, people often forget that the “Facebook for professionals” indeed came before Facebook. And (currently) seems like it has a more solid road ahead.

@alexia because $LNKD is as sticky as $FB but with 1) ads that monetize well; 2) a vibrant subscription business; and 3) proven management.—
Matthew Prince (@eastdakota) May 30, 2012