MOUNTAIN VIEW, Calif. — LinkedIn and Facebook celebrated the anniversaries of their IPOs just a few days apart last week. But their experiences as publicly traded companies couldn’t be more different.
LinkedIn Corp. promotes its service as a steppingstone to a more enriching career. As it turns out, the professional networking company’s initial public offering was a great place to start a rewarding investment portfolio, too. LinkedIn’s stock has nearly quadrupled in value from its $45 IPO price on May 20 two years ago. On Friday, it was fetching around $182 per share.
In contrast, Facebook’s stock is hovering around $25-27 per share, down 29 percent since making its debut at $38 on May 18, 2012.
LinkedIn is emerging as the standout among its cohort of hotly anticipated IPOs from online companies that connect people with common interests. It’s growing faster and yielding far better shareholder returns than the rest of a class that includes Groupon, Zynga and Yelp Inc., as well social networking leader Facebook.
But for all its success, Linked- In still hasn’t immersed itself into people’s lives and reshaped technology as profoundly as Facebook has. Although LinkedIn has been attracting more frequent visits since its IPO, people still spend far more time on Facebook and share more of their lives there. Unlike Facebook, LinkedIn hasn’t become a hub for other online services, ranging from games to music.
Even among its fans on Wall Street, LinkedIn is seen as little more than an online hunting ground for opportunistic employers.
But that could change if CEO Jeff Weiner and executive chairman Reid Hoffman realize their ambitions. As the 10-year-old company heads into its second decade, its two top executives want to establish its website as an integral part of the global economy.
“We would have a digital profile for every company in the world and a professional profile for every one of the 3.3 billion people in the (worldwide) workforce,” Weiner said. “We would then be able to overlay professionally relevant knowledge for each one of those individuals and each one of those companies.”
LinkedIn still has a long way to go. It has profiles of some 225 million people and 500,000 companies. But the odds of LinkedIn fulfilling its aspirations may be less of a longshot than the one Hoffman faced when he first started pondering a professional networking service in the midst of the dot-com bust in 2000.
At the time, Hoffman was worried about losing his job at online payment service PayPal, prompting him to mull other ideas with PayPal co-founders Peter Thiel and Max Levchin. A rough concept for LinkedIn came up then, but Hoffman didn’t pursue it because PayPal started to thrive.
After eBay bought PayPal in 2002, Hoffman plowed much of the money from that deal into LinkedIn, which he started in May 2003 with several former colleagues. His stake is now worth $3 billion.
LinkedIn now has market value approaching $20 billion and employs about 4,000 people. It’s expanding so quickly that it’s running out of space at its Mountain View, Calif., headquarters. There will be space for nearly 3,000 more workers once its new campus in nearby Sunnyvale is finished next year.
Things might not have worked out so well if Hoffman, 45, and Weiner, 43, hadn’t been introduced to each other at a conference in 2008. They hit it off immediately, something Hoffman remembered a few months later when he began thinking of replacing Dan Nye as CEO.
Hoffman had been Linked- In’s CEO during the first four years of the company’s existence, and he knew it wasn’t something that he wanted to do for another extended period.
“I like solving business strategy problems, and I like creating whole new ecosystems for people. ... I always knew I didn’t want to be CEO forever, but I still wanted to get LinkedIn to where it needed to get,” he said.
That’s where Weiner came in. He recently had ended a stint as a Yahoo executive and was helping out various startups. He joined LinkedIn as president in late 2008, and was promoted to CEO six months later.
The partnership has proven highly productive. LinkedIn’s membership has increased sevenfold since Weiner came on board. Revenue this year is expected to approach $1.5 billion, 19 times more than before his arrival. Analysts predict LinkedIn’s net income will rise about 20 percent this year to $26 million. The company has made a habit of topping projections, helping to propel its stock.
In the shadow
The secret to LinkedIn’s success? The company has turned its service into an easily searchable treasure trove for employers and headhunters. The company makes most of its money from fees for analytical tools and better access to individual profiles.
“They are not even scratching the surface of what they might eventually be able to do,” said Wedge Partners analyst Martin Pyykkonen.