Search This Blog

Tuesday, 6 May 2014

LinkedIn ($LNKD), Twitter ($TWTR) and the burden of being a one-trick-pony, having loads of excess cash-without-a-purpose!

This morning, I jokingly congratulated my colleague Ron with his new job at ‘Looking for a new challenge...’ Inc. I had been warned by LinkedIn ($LNKD), through my mail box, that Ron had found this new, but not so promising ‘job’.

After reading this LinkedIn mail, I couldn’t help wondering about exactly who was made happy with such a pointless and annoying message?!  And, as a matter of fact, with the whole flood of often pointless congratulation mails and other insignificant and annoying warnings that are clotting into my mailbox every day?!

Sent by the likes of LinkedIn and Twitter ($TWTR).

I do actually appreciate the warning messages by LinkedIn, that connections of mine are celebrating their birthdays. Birthdays are easily forgotten and congratulating people with it – through a personal mail, of course – is a good way to restore or secure relations with people who you truly like.

Still, I would like to short the messages that “John Doe has added a new skill”, or that “Pork E. Pig, Wile E. Coyote and Elmer J. Fudd have retweeted this tweet by Daf E. Duck”.  

Perhaps the worst category of annoying messages is, when you reacted to a certain message or picture ‘in a random act of foolishness’, and afterwards you get a warning for every time that somebody else reacted to the same message or picture.

As if I care, if it wasn’t my picture, message or riddle…?!

If John Doe enjoyed a busy week, having a few courses and workshops which he all added to LinkedIn, I might receive two or three different emails on ‘his’ behalf.  

And with something like the crisis in Ukraine or other important events happening in the world, I might receive daily emails from Twitter, in the spirit of the one I mentioned earlier, warning me about Tweets from Tweeters that I follow.

Last, but not least: if I have been so blonde to solve one of those ubiquitous math riddles on LinkedIn and to post the answer, I can expect at least ten other responses from people who were also ‘legally blonde’ by solving this riddle. I just don’t want to know that! Really!

I suspect that there is a very simple reason for these useless and annoying mails and messages: the enormous amount of money that companies like Twitter and LinkedIn received from their IPO’s at the international stock exchanges. Money that should visibly do something...

Both LinkedIn and Twitter suffer from the following circumstances: their product is already nearly perfect and loved by many people, who adopted it worldwide. This worldwide adoption has created an enormous amount of ‘potential value’ for these companies; hence: like potential energy in physics.

However, the real value of these companies (aka the profitability) lags dramatically, due to a missing, structural earnings model that could fund these companies in years to come.

To make things worse: many of these adopters often love the product ‘as is’ and they don’t need to have many extras and new features to come with it. Besides that, they don’t like to see their favorite tool flooded with adverts and sponsored links. 

And so there is actually little room for dramatic improvement within the core product, unless these companies expand their core business with radical new ideas, products and services. This was a message that Microsoft, Google and Yahoo understood very well in the past.

Still, both Twitter and LinkedIn manage an enormous amount of investment money coming from their IPO. That money is now looking for a way to be spent productively in order to offer new products and services and to generate extra (sources of) income. Until now that has seemingly happened in vain; that is why I call this money ‘cash-without-a-purpose’.

Spending this investment money productively and effectively is a very hard and unrewarding task, as there are thousands of ways to do things wrong and only a few ways to do things right…

And all the time the millions and millions of shareholders are breathing in the necks of the CEO’s, in order to see improved results and a promise of endlessly increasing cash flows in the future. That was the reason for the shareholders to invest in Twitter and LinkedIn in the first place. This pressure seems immense…

I adore Twitter and I am amazed by the enormous amount of good and topical information, usable links and interesting discussions that I can find there every single day. Still, I don’t see how Twitter – as a single product - could be improved further…

Or how – as a matter of fact – it could ever earn its enormous amount of investment money back, coming from its initially very successful IPO.

When I look at the stock ratings since January, 2014, I fear that the shareholders have developed the same haunting thoughts:

Stock rate development of Twitter during the last year
Data courtesy of:
Click to enlarge
About the same is true for LinkedIn. It is a good and effective way of putting your curriculum under the attention of companies and it can bring you in contact with people and companies that offer jobs, which are suited for you.

Still, I consider LinkedIn to be quite boring and – in my humble opinion – it can never beat personal contacts and personal relations. With LinkedIn you can turn people you already know in (slightly) better relations, but you hardly turn people you DON’T know into valued and satisfactory, personal relations after all. The bottom line is that people remain ‘suckers’ for personal contacts and friendship, even if these are on a strictly business level: you simply don’t care so much about people who you don’t know personally. 

Thus, ‘friends’ and relations on LinkedIn became exchangeable ‘commodities’, which could be used and appreciated for their (temporary) purpose and usefulness. However, they could never replace real colleagues and friends of flesh and blood!

Its IPO and the first three years of its existence, after the introduction at the stock exchanges, have been hugely successful for LinkedIn. Nevertheless, the stock seems ‘over the hill’ since September 2013 and I wonder if this is ever going to change.

Stock rate development of LinkedIn during the last 3 years
Data courtesy of:
Click to enlarge

Will this be because the people became disappointed with the general direction, improvement and expansion of LinkedIn?! This could very well be. And unless something dramatic happens, this might not change so easily.

My prediction for the future would be that Twitter and LinkedIn will continue their life as useful and handy tools, but quite limited in their purpose.

They will both be appreciated by their users for what they are do for them, but they might never make their shareholders rich in the long run.
Unless… their management can make a dramatic U-turn, of course.

1 comment:

  1. Thank you so much for sharing a lot of this good blog thank you for sharing Admin...