LinkedIn IPO – Why it may fail why it may be a super success

This will be a very interesting IPO from a variety of perspectives:

1) The first US Social Media IPO
It's an important indicator for other IPO's. Being first is for another reason VERY important. If Facebook would go public with a billion $ IPO it would suck up a lot of available capital that would no longer be available to others. its blog.

2) Social Media Power in an IPO
It was a unique and powerful FIRST when President Obama leveraged social media for the presidential campaign. Obviously he didn't have a quiet period. It will be interesting to see how LinkedIn as one of the social media masters will leverage social media to support the IPO before, during and most importantly after the bell rings. It may become a super success – and if it is only because it is a first using social media in it's IPO. It may set the bar to an all new level.

3) Social Media Risk in an IPO
To the contrary there may be some risk in todays wide open public world where many disgruntled users may raise their voice and put some shadow over the process. Whether they have an impact or not remains to be seen. Comments like the one below will be up quickly and the IPO team, the company, the investor will need to differentiate between individual rants and smart analysis

Christian Kvalheim for instance commented

90 million users, $44.1 million in premium subscriptions that's it? The lowest subscription is worth 299.4 usd a year. 44.2 mill divided by revenue pr user is ~147000 or so users paying premium or ~0.163 % conversion rate. That's a freaking terrible conversion rate.

4) Democratization of influence
Even so my book is not out yet but "Democratization of Influence" will be seen in this and similar IPOs – regardless. For instance TechCrunsh reported amongst other content:

Other interesting things to note from the filing, with regard to LinkedIn’s risks:

“We expect our revenue growth rate to decline, and as we continue to invest for future growth, we do not expect to be profitable on a GAAP basis in 2011.

Other companies such as Facebook, Google, Microsoft and Twitter could develop competing solutions or partner with third parties to offer such products. We face competition from a number of smaller companies in international markets, such as Xing in Germany and Viadeo in France, that provide online professional networking solutions, as well as Internet companies in the customer relationship management market, such as Salesforce.com (Chatter and Jigsaw).”

For somebody not familiar with SEC rules it reads almost like a shocking disclosure. But if you have been through IPOs before you just know that is is almost a standard clause. It's part of the disclosure and protecting companies and investors in the same way. In the past that was only read by people who were in the process of investing and knew how to read it.

But in times where everybody can put up a blog, post and play an authority role this may look like a red flag not only to investors but also to users who may feel the company is actually not very healthy.

5) Social Media Responsibility
Blogs like TechCrunch are dependent on publicity and highly controversial and provocative posts. The above example – just 6 hours old shows that we will need to think more than ever about a social responsibility, when communicating to a larger audience. Is this or any following IPO team prepared for this?

LinkedIn announced the filing a few hors ago on their blog.