Stephen Foley: Branchout may be a cheap alternative to LinkedIn
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Saturday 11 February 2012
US Outlook: Those optimistic investors who are paying 10 times annual revenue for a share of LinkedIn ought to look over their shoulder.
A little Silicon Valley startup called Branchout thinks it can do in a few more months what it has taken LinkedIn more than eight years to do, namely build a powerful network for professionals to share their resumes with contacts, recruiters and potential employers.
LinkedIn is still going great guns, as its results on Thursday attested. You can't sniff at $168m (£108m) in revenue and another 20 million subscribers in one quarter alone.
Unlike the other here-today-god-knows-what-tomorrow internet flotations of last year, LinkedIn has three robust revenue streams. It gets money from recruiters who want access to its 150 million users, from advertisers who pay top dollar to target them, and from many subscribers themselves who pay for premium services.
It is handily profitable (the tune of $6.9m in the last three months of 2011), though not so handily as to justify its $8bn valuation.
Branchout, meanwhile, has signed up 10 million people since July 2010, it revealed this week. It has the potential to grow much more quickly because it uses Facebook as a platform, allowing users to buildtheir network using their Facebook friends list.
It is too soon to predict long-term success for Branchout, but it is worth noting that LinkedIn is not the only kid on the professional networking block. And that is not something that has been priced in yet.
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