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David F Carr
David F Carr
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Social Business Moves Beyond Facebook's Coattails

Facebook's stock market plummet leaves LinkedIn and Jive Software looking good.

Enterprise Social Networks: Must-Have Features Guide
Enterprise Social Networks: Must-Have Features Guide
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It's no coincidence that Jive Software's stock market value peaked in April, as excitement was building for Facebook's pending public offering in May. When LinkedIn went public in May 2011, the first day pop its stock enjoyed was explained partly by investor anticipation of the Facebook IPO, which of course would be much more exciting.

These pioneers in using social networking for business purposes had to explain themselves to the world, at least in part, by how they were like Facebook, only different. Today, they might want to put a bit more emphasis on the difference.

Not that we should feel too sorry for Facebook, struggling along with a market capitalization of about $41 billion as of this week. This is only disappointing in comparison with the $100 billion-plus valuation initially set by the IPO. In part, Facebook is struggling from mismanagement of the IPO itself, including technical problems with the first day of trading on the NASDAQ exchange. Investors also seem to have shifted to thinking Facebook will merely be a phenomenally successful business, rather than the most exciting of all time. In July, Facebook reported $1.8 billion in revenue and progress on a strategy for profiting from mobile advertising. Yet formidable obstacles to success now seem to outweigh estimates of limitless potential.

Facebook stock is now trading at or below $20, compared with the IPO price of $38. I offer no opinion about whether it's a steal at the current price, still overvalued, or about right. However, it strikes me that now is a good time to speak up for the value of social business and business-oriented social networking on its own terms, ushering it out of the shadow of consumer social networking.

LinkedIn and Jive, my two points of comparison, are very different businesses from each other and from Facebook.

Often characterized as the "boring" social network, where user profiles resemble interactive resumes, LinkedIn is a target-rich environment for job hunters, recruiters, salespeople, business development types, and others seeking to make professional connections. The investors who made LinkedIn stock double to more than $100 per share on the first day of trading recognized the value in that. More importantly, LinkedIn has held onto that value and still trades at more than $100 per share. LinkedIn has a market capitalization of about $11 billion, so even in its diminished state Facebook is nearly four times as highly valued by the market. Still, LinkedIn IPO investors have more reasons to be happy than those who plunked down their money for Facebook.

As the Motley Fool points out, Facebook "ultimate insider" Peter Thiel recently cashed out of most of his Facebook holdings but still retains his entire stake in LinkedIn. He was an angel investor in both firms.

Jive Software enjoyed a strong showing for its December IPO, which climbed from the initial price of $12 to a first day close of about $15. Today, Jive continues to trade at about $15, so the only IPO investors it has made rich would be those who cashed out in April, when the stock ran up to about $28. Informed investors may have bid up the stock based on Jive's own potential, but some were also probably influenced by the idea that the stock was "like Facebook," only for use inside of companies.

Where LinkedIn is still a consumer social network, with advertising as a significant revenue stream, Jive sells software and cloud services for social networking within a business, or between employees and customers or partners. Judged on its own merits, however, Jive has at least not been caught in the downdraft from Facebook's market performance.

It's time LinkedIn was appreciated for being "like LinkedIn" and Jive for being "like Jive." Over time, we may see them teaching Facebook a trick or two.

Follow David F. Carr on Twitter @davidfcarr. The BrainYard is @thebyard and facebook.com/thebyard

Social media make the customer more powerful than ever. Here's how to listen and react. Also in the new, all-digital The Customer Really Comes First issue of The BrainYard: The right tools can help smooth over the rough edges in your social business architecture. (Free registration required.)

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