What will IPO's mean for us users?

With a number of IPO's in the pipeline from many of the major online services we use, are we going to see less user targeted features and more shareholder "profit making" features. Just  recently we have seen Linkedin go public on the 19th May this year and they have profits of just over $15m for the 12 months ending 31st December 2010. Shareholders are probably happy at the moment though - LNKD share prices are holding on the NYSE.

However with some of our other future IPO's such as Groupon later this year and also Facebook expected next April - these companies are said to not be making profits. A little consideration needs to be taken in to account at whether these organisations will come under pressure from their shareholders to give them a return. Will we see any changes in the user experience for the products we use online? I'm not saying they are all going to start charging monthly subscription but perhaps more adverts.

Let us know what you think...@snaksocial

Groupon or GroupOff?

Groupon has had phenomenal growth in the past three years and many more competitors such as LivingSocial have popped up, many turning niche to compete. Launched in November 2008 by Andrew Mason the company now operates in 43 countries with "about 7,000 employees". The business was offered $6bn from Google which Groupon turned down.

For those who don't know? Groupon will offer their users in each market a "Groupon" each day. The deal needs to be bought by a certain number of people so that it becomes available to all. The company has had both good and bad reviews by businesses. The benefits include being able to draw in new customers which can then become loyal and make repeat sales. It's not usual for the business to make a profit from Groupon in fact many companies make losses. These are justified as a marketing expense and I have also heard a number of unsuccessful reviews where the companies don't get the support needed. They already have over 83m subscribers so it is quite an attractive opportunity for many businesses.

I feel that not every business is going to be suited to running a deal because Groupon is trying to make profit and they may stretch your business too far. Its so important for the business to really think about whether the deal Groupon wants to run will suit their business.

Groupon reportedly made $713.4 million in 2010 and has already bought in $644.7m in the first quarter of this year and has only made a profit in the first quarter of 2010 of $8m. This could be put down to its rapid growth and high marketing costs. Its obvious that Groupon are making sure that they have majority market share and are looking for long-term profits. With an IPO in the pipe line are investors going to get the profits they seek and are the business going to be better off or are Groupon just going to cash in. Their IPO is reported to make Groupon worth $25bn.

Tell us what you think...

Valuations!!!

Dot-Com Bubble of 2000 springs to mind for many people when we consider the ongoing valuations of a number of tech companies. With sites such as Facebook which is ranked second most visited site on the Alexa rankings do we think that the valuation of $85bn (based on the sale of 100,000 shares on SharePost) is justified seen as it is supposedly nearing 750m users.

If we consider this to be growing and the recently reported drop in figures in some area's of the world to be just a minor blip.The increase in users of the internet world wide will flock to social media as they go online should see the company hit 1bn users. The site is a daily destination for a large number of users and Facebook has data on its users that other companies could only dream of knowing. So Facebook can innovate, develop and bring new features to market very quickly which if managed properly I think we could see them beat Google to that number one ranking (unlikely but possible if Facebook improves services).

On the other hand companies aren't about just rankings and users because in the long run they need to make a profit with their users. Many of these companies are asking for more funding and these are inflating valuations, at the end of the day these companies need to give value to their investors. So obviously investors are taking the risk because they don't want to miss being part of what could be very profitable. (Groupon reported value $25bn)

When I last wrote about Myspace I spoke about my thoughts on redeveloping the product and didn't mention the price which I feel now is better suited to the company. The company which now has the real opportunity to look at the gaps in the market and what their users want but don't have from a different perspective. The £22m price paid for a failing company which was once valued at $580m and still couldn't compete with Facebook. could we see this happen again to some of our other giants? I expect so...

To be continued, Let us know what you think...