Web startup Linked In turns a profit
Social networking site focused on business people says it has 5 million users; mum on IPO plans.
NEW YORK (CNNMoney.com) - If you've worked in an office in the last three years, chances are you've gotten an e-mail from a professional contact asking you to update your information.
One of the companies behind those e-mails, Internet firm Linked In, announced Tuesday it has turned a profit.
One of a handful of "social networking" Web companies to get venture capital funding in 2003, Linked In, which allows registered users to build and maintain a network of professional contacts, said it has signed up five million users so far. The company said it signed up three million of those in 2005 alone and plans to add another five million users in the next 10 months.
Linked In allows users to register their professional contact information and send it to their contacts, as well as keeping contact information up to date. The company offers free, advertiser-supported services but makes the lion's share of its money from premium services, which run from $5 to $200 per month. Job listings cost $95.
Up to now, the company has grown largely via word-of-mouth, rather than advertising, as have other social networking sites such as Plaxo, another contact management site, and Myspace.com.
Konstantin Guericke, vice president of marketing of Linked In, said that unlike other popular social networking sites such as MySpace.com, which targets younger users and was acquired last year by News Corp (down $0.15 to $17.40, Research)., Linked In aimed for an older demographic.
"We purposely focused entirely on business users from day one," he said. "There are more people between the ages of 25 and 65 than 15 to 25. We thought that was the bigger marketing opportunity from the social networking side."
Last year, social networking sites started looking good to companies on the prowl for acquisitions. In addition to the Myspace.com acquisition, Yahoo! bought photo sharing Web site Flickr and bookmark-sharing Web site Del.icio.us.
Technology mergers and acquisitions heated up in 2005, and experts say that trend will continue in 2006 -- with social networking sites among the prime beneficiaries.
With Linked In becoming profitable, the company won't have to raise money from its current investors, Guericke said.
Guericke remained vague on the company's plans for financing in the figure, sidestepping a question about whether it plans to go public or get acquired.
"Our investors are interested in driving the growth of the company," he said. "Our next goal is reaching the 10 million user mark. You just focus on your business, and how the company is funded is a secondary concern."
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