You have two companies. Both are social networking sites with immense popularity. Both generate revenue by allowing advertisements to be displayed on their websites (one much more so than the other). And yet in terms of clientele and providing a service with substantial monetary value, these two could not be more different.
The mission of the first, verbatim from its latest annual report, is to “Connect the world’s professionals to make them more productive and successful.”
The mission of the second, also verbatim, is to “Make the world more open and connected.”
You probably easily guessed that the two networks I am referring to are LinkedIn Corp (NYSE:LNKD) and Facebook Inc (NASDAQ:FB). The missions of each, describing the service the companies aim to provide, can give you a glimpse as to whether they have any real monetary value.
LinkedIn provides something worth paying for
LinkedIn gives professionals a portal to connect with others in their field. The site allows its users to establish connections that will will expedite their success and further their careers.
In my opinion, that service is a valuable one, and LinkedIn Corp (NYSE:LNKD) provides it to individuals free of charge. Which was a wise move on its part, as LinkedIn could never have obtained the popularity it has by charging each individual member. The vast majority of individuals balk when faced with having to pay for a social networking site.
In providing a top-notch social network for professionals free of charge LinkedIn Corp (NYSE:LNKD) has done something amazing. It has created a large pool of individuals who have both high degrees of education and specialized knowledge. Such a pool is immensely valuable, the kind of value a prospective employer would pay money for.
Additionally, many LinkedIn members are not new to the professional world, but rather people who have already achieved immense success within it. People like that tend to have deep pockets, making them an audience advertisers will pay big money to gain access to.
When it comes to websites that connect employees and employers, only one can achieve massive success. Proving that claim only requires examining recent results from Monster Worldwide, Inc. (NYSE:MWW). In 2012 it posted negative net income of $258.72 million, and has cash reserves that are quickly dwindling.
And that’s significant because Monster operates in more than 40 different countries–so it has already picked a good portion of the low hanging fruit. Despite the market’s rebound, the stock is trading near its 52 week low. All told Monster Worldwide, Inc. (NYSE:MWW) is now trading for less than $600 million, while LinkedIn Corp (NYSE:LNKD) has a market cap near $20 billion. The term top dog means there can be only one.