Tag: linkedin

Job upgrades and downgrades, and LinkedIn

I think I’ve ranted about LinkedIn here before. I’ve talked about the pointlessness of LinkedIn recommendations (due to selection bias), the further pointlessness of skill endorsement (a desperate attempt by now-public LinkedIn to get users to interact more with each other) and the seemingly ungrammatical “say congrats” (some of these rants might have been on twitter, so not bothering to pull up links).

This post is again about the “say congrats” feature on LinkedIn. When you change your job (or, change your job title on LinkedIn), your contacts see the change on their timeline, with a helpful “say congrats on the new job” hint.

Now, the problem is that not all job changes are upgrades! Sometimes, you might get fired and change your headline from “XXX at YYY” to “ZZZ industry professional”, and LinkedIn asks your contacts to “say congrats”. Another time, you might get tired of your old job, and boldly state on your LinkedIn headline that you are looking for new opportunities (eg. “Software Engineer at XXX, looking for new opportunities”), and LinkedIn again jumps the gun and asks your friends to “say congrats”. At other times, you might make a job switch which looks eminently like a downgrade (especially for people who understand both your old and new jobs). And LinkedIn rubs it in and asks your contacts to “say congrats”.

It seems like LinkedIn needs better data scientists. And people who can make better sense of how to get their users to talk to each other and create value out of a network that is well past its fast growth phase.

IPOs Revisited

I’ve commented earlier on this blog about investment bankers shafting companies that want to raise money from the market, by pricing the IPO too low. While a large share price appreciation on the day of listing might be “successful” from the point of view of the IPO investors, it’s anything but that from the point of view of the issuing companies.

The IPO pricing issue is in the news again now, with LinkedIn listing at close to 100% appreciation of its IPO price. The IPO was sold to investors at $45 a share, and within minutes of listing it was trading at close to $90. I haven’t really followed the trajectory of the stock after that, but assume it’s still closer to $90 than to $45.

Unlike in the Makemytrip case (maybe that got ignored since it’s an Indian company and not many commentators know about it), the LinkedIn IPO has got a lot of footage among both the mainstream media and the blogosphere. There have been views on both sides – that the i-banks shafted LinkedIn, and that this appreciation is only part of the price discovery mechanism, so it’s fair.

One of my favourite financial commentators Felix Salmon has written a rather large piece on this, in which he quotes some of the other prominent commentators also. After giving a summary of all the views, Salmon says that LinkedIn investors haven’t really lost out too much due to the way the IPO has been priced (I’ve reproduced a quote here but I’d encourage you to go read Salmon’s article in full):

But the fact is that if I own 1% of LinkedIn, and I just saw the company getting valued on the stock market at a valuation of $9 billion or so, then I’m just ecstatic that my stake is worth $90 million, and that I haven’t sold any shares below that level. The main interest that I have in an IPO like this is as a price-discovery mechanism, rather than as a cash-raising mechanism. As TED says, LinkedIn has no particular need for any cash at all, let alone $300 million; if it had an extra $200 million in the bank, earning some fraction of 1% per annum, that wouldn’t increase the value of my stake by any measurable amount, because it wouldn’t affect the share price at all.

Now, let us look at this in another way. Currently Salmon seems to be looking at it from the point of view of the client going up to the bank and saying “I want to sell 100,000 shares in my company. Sell it at the best price you can”. Intuitively, this is not how things are supposed to work. At least, if the client is sensible, he would rather go the bank and say “I want to raise 5 million dollars. Raise it by diluting my current shareholders by as little as possible”.

Now you can see why the existing shareholders can be shafted. Suppose I owned one share of LinkedIn, out of a total 100 shares outstanding. Suppose I wanted to raise 9000 rupees. The banker valued the current value at $4500, and thus priced the IPO at $45 a share, thus making me end up with 1/300 of the company.

However, in hindsight, we know that the broad market values the company at $90 a share, implying that before the IPO the company was worth $9000. If the banker had realized this, he would have sold only 100 fresh shares of the company, rather than 200. The balance sheet would have looked exactly the same as it does now, with the difference that I would have owned 1/200 of the company then, rather than 1/300 now!

1/200 and 1/300 seem like small numbers without much difference, but if you understand that the total value of LinkedIn is $9 billion (approx) and if you think about pre-IPO shareholders who held much larger stakes, you know who has been shafted.

I’m not passing a comment here on whether the bankers were devious or incompetent, but I guess in terms of clients wanting to give them future business, both are enough grounds for disqualification.

LinkedIn recos

LinkedIn in general is a useful site. It’s a good place to maintain an “online CV” and also track the careers of your peers and ex-peers and people you are interested in and people you are jealous of. If you are a headhunter, it is a good place to find heads to hunt, so that you can buzz them asking for their “current CTC; expected CTC; notice period” (that’s how most india-based headhunters work). It also helps you do “due diligence” (for a variety of reasons), and to even approximately figure out stuff like a person’s age, hometown, etc.

However, one thing that doesn’t make sense at all to me is the recommendations section. Point being that LinkedIn being a “formal” networking site, even a mildly negative sounding recommendation can cause much harm to a person’s career and so people don’t entertain them. Also, the formality of the site prevents one from writing cheesy recommendations – the thing that made orkut testimonials so much fun. And if you can’t be cheesy or be even mildly negative, you will be forced to write an extremely filtered recommendation.

Rhetorical question – have you ever seen a negative or even funny or even mildly unusual recommendation on LinkedIn? I haven’t, and I believe it’s for the reasons that I mentioned above. And if you think you are cool enough to write a nice recommendation for me, and that I’m cool enough to accept nice recommendations, I’m sure you and I have better places to bond than LinkedIn.

Anyway, so given that most recommendations on LinkedIn are filtered stuff, and are thus likely to be hiding much more than they reveal, isn’t it a wonder that people continue to write them, and ask for them? Isn’t it funny that “LinkedIn Experts” say that it’s an essential part of having a “good profile”? Isn’t it funny that some people will actually take these recommendations at face value?

I don’t really have an answer to this, and continue to be amazed that the market value for LinkedIn recommendations hasn’t plummetted. I must mention here that neither do I have any recommendations on LinkedIn nor have I written any. To those corporate whores who haven’t realized that LinkedIn Recommendations have no value, my sympathies.

Update

Commenting on facebook, my junior from college Shrinivas recommends http://www.endorser.org/ . Check it out for yourself. It seems like this cribbing about linkedin recommendations isn’t new. I realize I may be late, but then I’m latest.

It’s been a year, almost

A couple of hours back, I renewed my account. It’s been a year since I purchased the noenthuda.com domain, and it definitely feels like it’s been much longer. This blog, however, is yet to celebrate its first birthday – it will do so on the 22nd, on the same day when there will be a Total Solar Eclipse in Central India. We’ll have more elaborate birthday celebrations then. Actually, if you have any good ideas as to how to celebrate the first birthday of noenthuda.com , please mail in.

So it was on the 7th of July last year that I registered noenthuda.com. It took about 15 days after that to decide on my host (I settled on totalchoicehosting), figure out how to organize the site, etc. As you might have noticed, the homepage (noenthuda.com) redirects to this blog (noenthuda.com/blog). The main reason behind this is that I’ve been too lazy to figure out what to do with my main site. I don’t really fancy turning this into a professional site – LinkedIn are there for that. All my writing is here on this blog, so no separate place needed for that.

There is another blog attached to this, called Twisted Shout. You can see a link to this from the right hand column of this site. You might notice that the site is defunct. The last post on that was several months ago. I had been using that site for discussing stuff such as the Petromax Theory, the Goalkeeper Theory and other similarly strong fundaes. Aadisht and Kodhi, my co-authors on that blog, had also planned to script our sitcom “rash driving” on that. Again, there was only a single episode of that and then NED happened.

Some of you might also know that NED is also the name of a quiz team, featuring Kodhi, Aadisht and me. It’s a subset of the erstwhile Sumo Yet So Far, which also featured Swami. It’s been a while since NED quizzed together, the last occasion being the QFI Open quiz in Chennai last summer. Our next collective performance will be at the Landmark Quiz in Chennai next month. Maybe I could have a section of the site dedicated to our quiz team. Maybe I’ll do that once our CV expands.

Then there are the NED talks, which I had announced a few weeks back. These talks will be held as planned, in October this year in Bangalore. I hope to make this a day-long event, in an auditorium. So basically it will be a series of lectures. We are looking for speakers, and listeners. We will also have 1-2 open house sessions so taht everyone can put CP (class participation).

I hereby call for speakers for the inaugural NED talks. The date is not fixed but it will be on some Sunday this October in Bangalore. You will have to give a talk in less than 18 minutes on any topic that remotely relates to NED. For example, I plan to speak on the Studs and Fighters Theory, and how it might impact NED. So if you are interested in speaking, write a short write up on yourself, and what you want to talk about and send it to me at skthewimp AT yahoo DOT com. I think we will need a total of TEN speakers.

In other news, I’ve got proper net access now in Bangalore (BSNL Broadband). So immense peace are there. Normal services should resume shortly.