Deal Radar 2008: LinkedIn Should Roll-Up Jobs

LinkedIn is a professional business networking site founded by Reid Hoffman in 2003. It allows members to showcase their profiles and caters to the age 25-65 professionals demographic. It generates revenues via subscriptions and advertising. Recruiters use the site to tap talent, and is LinkedIn’s primary revenue generating segment.

In 2003, LinkedIn secured $4.7 million in Series A funding from Sequoia, and in 2004 received a Series B round of $10 million from Greylock. In January 2007, the site secured another $12.8 million from Bessemer and the European Founders Fund (EFF).

LinkedIn has over 17 million registered professionals from across the world, representing 150 industries. In October 2007 LinkedIn attracted 4.9 million unique visitors, up 189% over October 2006. The site is adding 65,000 new professionals every week.

Though, LinkedIn basic is free, premium users pay between $200 and $300 per year to access the site and recruiters pay as much as $2,000 per year. For $60 per year, users can request direct introductions. LinkedIn is expected to have earned revenues of $45 million to $60 million in 2007 and expects to hit $100 million in 2008. The Company has turned free cash flow positive.

At the time of its last financing in early 2007 the Company was valued at $250 million or about 5 times its projected FY2007 revenues of $45 – $60 million. Assuming the Company earns revenues of $100 million in 2008, it could easily command a valuation of $600 – $700 million.

Both old media (McClatchy, Gannett, etc.) and new media companies (Yahoo, MSN, News Corp., Google, etc.) could be interested in acquiring LinkedIn. Old media companies could see it as a good entry point into the social networking space, especially those who can add community features to their job sites.

LinkedIn is said to be open to acquisition at the right price and there have been rumors of News Corp. acquiring LinkedIn. In an interview to Fortune, LinkedIn CEO Dan Nye said “Helluva Lot” and “A lot more than $1 billion” when questioned about the price he is looking for.

I have different idea though.

I would like to see LinkedIn roll-up the Online Jobs category and build an independent Web 3.0 powerhouse out of it. Indeed.com, with over 5 Million unique visitors a month, is the leader in the vertical search category for jobs. Then there is SimplyHired and Jobster, as well as freelance project exchanges like eLance, Guru, oDesk. If you put them all together, a large user base emerges with a diverse set of capabilities.

I am looking to see this roll-up happen outside of Google’s sphere of influence, posing a challenge to Google’s apparent invincibility.

This segment is a part in the series : Deal Radar 2008

Comments

I was thinking about this last night as well, so many little companies, who compete with powerhouses for the same dollar. It’s these same powerhouses who have not brought inovation to the marketplace. If there was a way 2 or 3 of the above mentioned companies could merge or partner it would make an impact in the industry.

The only question, who wants to give up the CEO title. Some people like to be a big fish regardless of the size of the pond.

Matt Wednesday, January 9, 2008 at 9:37 AM PT

Not just the CEO title, these are complex negotiations around what are fair valuations, strategic and technical directions, etc. of the merged entity.

Sramana Mitra Wednesday, January 9, 2008 at 1:33 PM PT

Jobster is a over blown mess! something like https:///www.recruit.net should be added to the mix for international, multi-lingual coverage.. also something like jobrapido has good european coverage..

in 2008 and beyond, a web 3.0 powerhouse cannot and will not be purely US centric..

Chan-Chi-Sang Thursday, January 17, 2008 at 8:38 AM PT

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