Share & Connect
Executives of LinkedIn quickly earned millions in an incredibly short amount of time.
The business-related social networking site was founded in March 2003 by Reid Hoffman who made a fortune as an executive at PayPal. Before the company’s recent stock market debut, Hoffman contacted bankers and chief executive Jeff Weiner to meet with potential investors. Demand for shares increased and as a result the offering price rose to around $45.
The success of began early last year when Mr. Hoffman , Mr. Wiener and their advisors decided to go public and devise a plan on how they controlled their offering, only a small percentage of shares were actually issued. When trading first began in May, LinkedIn opened shares as high as $83 and eventually soared past $100. LinkedIn’s top management closely monitored who received stocks using a unique iPad app created by Morgan Stanley.
With new social networking sites being the focus of new technology, other sites like the internet radio service Pandora have faced some financial hardships and optimistic investors may have to be more realistic to avoid huge losses.
Though LinkedIn had convinced the market it was worth nearly $9 billion, $15 million was earned in 2010. With shares leaping, leading businesses like Morgan Stanley, Bank of America and JPMorgan Chase who provide financial services for the company have benefitted from the site’s success as well as ordinary investors.
An early LinkedIn investor Peter Thiel stated that “the LinkedIn I.P.O. will be used very powerfully over the next year as these companies go public and bankers deal with SiliconValley, it sets things up for the other big deals.”