"Lifestyles of the rich and famous, they're always complainin', always complainin."
Just three days after LinkedIn went public on the NYSE, "Russia's Google" or Yandex, went public on the Nasdaq in the most pricey internet offering since Google in 2004. What does that mean? Well the company raised $1.3 billion for the IPO and just like LinkedIn, it went from being valued at around $4-5 billion to $11 billion when all was said and done. Just a couple months ago we heard numerous reports about how private companies who were seeing success on the private market had no desire or were in no rush to go public, let's stop the bullshit. LinkedIn's IPO just opened the floodgates for a number of these so-called "satisfied being private" companies. Sarbanes-Oxley, cloud computing, blah blah blah. Going public is still the ultimate goal especially considering the interest in technology related companies.
But first, Yandex. Shares skyrocketed north of 55% on Tuesday, and the stock went from being priced at $25 at the beginning of the day to $38.84 by closing bell. Like LinkedIn, Yandex is profitable ($29 million last year) and has a net income of $134.3 million with a revenue of $439.7. Also like LinkedIn, Yandex isn't in its nascent stages or a company that just got VC funding last week. They've been around since 1997 under the leadership of CEO Arkady Volozh, a mathematician, and Ilya Segalovich, a geophysicist.
It's been awhile since the Russians had much to celebrate. They were the first to get to space, have had the best chess players, terrific writers, some talented hockey players and figure skaters, and now they've made their way into the new technology boom. Billionaire investor and entrepreneur Yuri Milner has been the center of attention the past couple years for his investments in Zynga and Facebook. His company DST Global (or Mail.Ru) now owns a 2% or $200 million stake in Facebook. He is one of the few people in Europe right now who gets IT and seemingly knows where to put his money-in Silicon Valley start-ups. Might come with being a Upenn graduate? Maybe. What I'm getting at here is that Russia/Eastern Europe is turning it around it terms of where they stand with innovation going forward. What venture capital giants Marc Andreeson and Ben Horowitz are to the US, Milner is to Russia. For every billionaire investor, we need brilliant entrepreneurs. Didn't Larry Page and Sergey Brin have physics backgrounds? Besides being older, these two Yandex guys have things in common with Google's bosses. It's a great thing for the country who's English speaking skills are clearly lacking, given Yandex's 60% market share in the country and its 270 million users. I also like this company because they've shown consistent revenue increases the past 3 years and they were established in '97, in the middle of the dot-com boom so they've been able to tweak their business model and technology to succeed now.
How do I know this "we don't need to go public" talk is overrated? Because Zynga just filed to IPO yesterday a year ahead of schedule. If LinkedIn and Yandex have had such succesful IPOs with a fraction of Zynga's $400 million profit in 2010, why shouldn't Zynga go public? It would be stupid not to given this "frothiness" in the market. Zynga, the maker of the Facebook game Farmville, Mafia Wars, and now Gagaville among many others, has been the social gaming leader for the past couple years. Facebook will not go away anytime soon, as a result, neither will Zynga. What will all the soccer moms do without Farmville? It's hard to imagine that world.
Look for Facebook and Groupon to be next in line for filing there IPOs sooner rather than later. Facebook is scheduled to go public April of 2012, but given the high interest in anything technology/internet related, they should get in NOW. Out of all the hot start-ups, Groupon is the one I have the least amount of faith in. Their business model, which mainly support small-businesses, can't be logical in the long-run for these companies, or can it? I think right now Groupon and LivingSocial are hot ideas to experiment with because the idea is new, it's something these restaurants have never tried-giving customers major discounts in hopes that they'll eat their food at a smaller price. Maybe it will continue to succeed 3-5 years down the road and I'll be proved wrong, but I don't think its sustainable for the sake of keeping these small businesses running or being profitable.
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