Web 2.0's Long Road to IPOs

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"Super-applications"

Facebook, which boasts 67 million members and an estimated $150 million in annual sales, is trying to get even bigger. The company hired its first chief operating officer March 4, swiping Google sales star Sheryl Sandberg. And it's in the market for a general counsel and public policy director, according to Zuckerberg. In February, Facebook put Vice-President Matt Cohler in charge of product development. "All these changes are set up to help us scale in the coming years," Zuckerberg says. The company is navigating international expansion and plotting a deeper push into entertainment, hoping to lure musicians and indie filmmakers to build profiles and showcase their wares.

LinkedIn is trying to mine more revenue from its nearly 20 million members. The site already commands some of the highest ad rates on the Web—the average LinkedIn user is 41 and has a household income of $109,000, according to CEO Dan Nye. The gold-plated demographics mean advertisers can aim pitches at big-spending subgroups. "If you want to advertise to CEOs in Silicon Valley, you can do that," he says.

Later this year, the company plans to roll out a new product called the LinkedIn Research Network, designed to let fund managers, lawyers, and other professionals find subject matter experts to help research investments, cases, and other projects. (LinkedIn has a partnership with BusinessWeek.com that includes a tool that lets users find LinkedIn connections at companies mentioned in BusinessWeek articles.)

An overseas expansion into Europe, and potentially China, is already underway. "The LinkedIn strategy is pretty simple," says Hoffman. "Get more professionals aware that there's this tool, and then build super-applications" the company can charge for.

Correct formula

Up Interstate 280 in San Francisco's Web-friendly SoMa district, Slide is trying to make advertising on its widgets more relevant by mining data it collects about the Facebook relationships among users who install them. The company is working on ways to analyze the stated interests of users in a circle of friends, then serve ads that might appeal to them, says Keith Rabois, vice-president of strategy and business development.

Slide plans to use a $50 million investment (BusinessWeek.com, 1/18/08) it took on Jan. 18 from Fidelity Investments and T. Rowe Price (TROW) to double its 65 employees and stock up on servers in the event of a recession.

It doesn't hurt to have two big mutual funds on board during a pre-IPO road show, adds Finance Vice-President Kevin Freedman. The investment, which values Slide at $550 million, could let it go public when it can fetch the best price, not when it needs the money, according to Rabois. "It is a public-market hedge," he says. "Our revenues could explode, or it could take a longer period of time as we're dialing into the correct formula."

For the VCs and institutional investors waiting for a Web 2.0 payout, that day can't arrive soon enough.

Ricadela is a writer for BusinessWeek.com in Silicon Valley.