It was, as usual, a carefully choreographed photo op: at an event hosted by LinkedIn, Barrack Obama promoted his $447 Billion jobs package that shall but Americans back to work. The current jobless rate of 9.1 percent is an extremely worrying figure that will likely define the upcoming elections. It therefore made sense to hold this town hall type of discussion with LinkedIn – an online tool for professional networking. Sitting next to Jeff Weiner, the charismatic and handsome CEO of LinkedIn, Obama sought to bathe in the glory of LinkedIn’s success story. Other visual markers reiterate this association: the LinkedIn logo is clearly on display throughout the room, the curtains represent the colour of the company and in the background are mainly LinkedIn employees.
Here, Obama appears to follow a pattern after visiting similar events hosted by Facebook and Twitter. The next year is election year and the Obama administration is carefully aligning itself with the major players of Silicon Valley. It was, after all, the power of the social network that helped Obama into power in the first place. If the social network can help Obama find a job, the underlining message of the photo op is that the social network can also help those that are currently still looking. It is a message filled with optimism and this most Obamaesque of words: hope.
On closer inspection however the main visual association with LinkedIn might come to haunt the Obama administration. It is true that LinkedIn is one of the great recent success stories of the boom in social media. In May 2011 LinkedIn was floated on the New York Stock Exchange which resulted in a market capitalization of currently $7.5 Billion. At the same time however, in the last quarter LinkedIn posted a net income of only $4.5 Million. In other words, LinkedIn’s capitalization does not reflect it’s current income, but rather, it reflects the market’s belief in future income. One of the main indices used to calculate the worthiness of a company’s stock is price-to-earnings ratio (P/E ratio) which, for most ‘traditional’ companies, hovers below or above 14. LinkedIn’s P/E ratio, on the other hand, is currently rated at 1100 either indicating an extremely high expectation in future growth or that the stock is subject to a speculative bubble. Obama’s association with LinkedIn is either based on extreme expectations, or, far worse, it is based on extreme speculation.
But there is another far more important reason why I believe the LinkedIn photo op was a rather ill fated event. Although LinkedIn claims to help those currently looking for a job, with just over 1.000 staff LinkedIn doesn’t actually employ many people themselves. This dilemma is better represented by comparing other companies with a similar market cap: US Steel ($3.35 Billion) employs 42.000, AMD ($4.42 Billion) employs 11.100 and Abercrombie & Fitch ($5.70 Billion) employs 9.000 full-timers whereas it also employs 76.000 part-timers. Obama’s association with LinkedIn is thus purely based on the superficial belief that indeed, LinkedIn creates job opportunities for those who subscribe to it’s services – some of which at a significant monthly cost for the user (I am yet to come across someone who actually got a job through LinkedIn).
A week ago the American Census Bureau published a shocking figure: 46.2 million Americans now live in absolute poverty. By far the worst statistics in the industrialized world, that figure represents nearly on in six Americans. Are these the people that sign up to LinkedIn in the hope of finding a job? Is it those people that have the internet connection that would even allow them to access LinkedIn in the first place? Are these the people that have the IT and media degrees that would make them potentially desirable in Silicon Valley? While these questions remain unanswered, the LinkedIn photo op represents an extremely risky strategy which ultimately hinges on LinkedIn’s continued success in the future. Similar to those investing in a vastly overvalued company, the President’s advisors will hope that LinkedIn’s stock prize has not quite yet reached a precipice.
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