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One of the cheapest deals ever valued at $1bn

June 18th, 2008

Oh, boy! Social networking continues to be white hot. I like these VCs, but they do seem a tad cocky in this video. David Sze says that “when they look back, they will say this is one of the cheapest things that those investors ever did.” Cheapest things–really? I hope, for your sake, David, you are wrong about that statement. The video is fun to watch:

I think David Cowan gets it closer to truth. He says “Compared to most startups, LinkedIn’s valuation is very high. But compared to what we think LinkedIn’s future valuations will be, it’s a bargain.”

I wonder about this deal. LinkedIn is a good site. My friend who is a VC uses it for research on new industries, but not sourcing deals. So, it adds value for him but it isn’t essential. I conducted an experiment when recruiting a hire at e-thePeople by launching campaigns on LinkedIn, Facebook and a targeted job board. I got a couple of warm leads from LinkedIn, so it was probably worth a couple of hundred dollars for my listing, but we hired someone sourced from the targeted job board.

I think that my experience is a cautionary tale for LinkedIn: death by paper cuts. They are certainly the market leader across, but if they are #2 in each of little niche, they may not be the most effective medium.

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