LinkedIn = Facebook for Business

LinkedIn has Facebook to thank for saving their business and making their company a valuable property.

LinkedIn struggled over the years to expand usage and discover business models that would generate revenue. They had some luck with using the platform for recruiting and selling premium subscriptions to LinkedIn power users. But most business users and corporations were not really thinking social.

Companies realized that recruiting on LinkedIn was very effective and especially liked going after potential employees that were not actively looking for a new job. Employees soon realized that completing their profile and polishing it with links and updates was good for career advancement.

But Facebook (FB) (and to some extent Twitter) create an awareness of social sharing that has helped professionals and organizations adopt the practice. At the same time most business users do not want to use FB for their professional activities and emerging professionals that grew up on FB are eager to embrace a new service where they can showcase their “business side.”

Fortunately for LinkedIn they face limited competition in this area. Existing recruiting companies like Monster failed to grasp this trend and most of the enterprise social networking tools (Yammer, SocialText, SalesForce Chatter, Jive) are aimed at internal rather than external professional networking.

Until and unless meaningful competition emerges we will maintain a core position in LinkedIn (LNKD – $99). The stock has enjoyed a strong move recently and trading at our current IV of $100.

We did take a look at Jive Software (JIVE – $26) trades far above any sensible IV we can come up with. The private company activity in this space is also hyperactive. As we write this we note that another innovative enterprise social, collaboration and decision making platform, Spigit, has just received another major round of financing.

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