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How can their technology possibly be worth $1.5B?

by nly 12y ago

danvoell 12y ago
Linkedin is paying for the content and ongoing business model. Lynda had $100M in revenue in 2014. Sure LinkedIn could have replicated the content but they are taking an existing business that works, building on it, and assuming that by marketing it via linkedin.com they can expand Lynda to a larger audience.
- martin-adams 12y ago
  Plus, they have one less key competitor in that space if they buy Lynda than to build it themselves
ghshephard 12y ago
It's not the technology, but the brand, customer base, content, and growing business that Linked In is investing in. Lynda.com has been working incredibly hard for quite a few years to build up their business, so I'm really happy to hear that they've been reward for all the hard work and excellent execution.
bdcravens 12y ago
This valuation isn't that uncommon these days, at least Lynda had revenue. Interesting, though, considering CodeSchool went for only $36M.
nl 12y ago
It's only 15 times trailing revenue (and 48% of it is paid in stock). Assuming they are showing decent growth, that's not such a big premium. They are being bought for their customers (and probably somewhat their library), not their technology.
jasode 12y ago
I disagree with the other replies saying that LinkedIn bought Lynda for the content. I still think it's the technology. Technology is not just Lynda's programming of their public facing website servers. Tech could include competency of content workflow from concept-to-release that the Lynda executive team has mastered. Generating lesson scripts; post-production of on-screen annotations, scheduling studios, etc. Technology also includes software to manage relationships with authors and pay correct royalty checks. If we break out components of Lynda.com for purposes of valuation, we might have: + customer base + content library + executive team and their programming staff + technology platform Yes, Lynda.com has an existing customer base and an obvious way is to look at the recurring revenue and make projections on it. However, I discount the customers because I'd guess that Lynda subscribers are the kind of tech savvy users that are very jaded about LinkedIn's shady business practices. It seems like the sentiment among these subscribers is to declare their separation from LinkedIn as a badge of honor. I just can't see that the executives from LinkedIn allocating the bulk of their $1.5 billion price for these customers. As for "content library", their existing portfolio consists mostly of timely courses that will become obsolete within months. How valuable is the "2009 Adobe CS4 Essential Training" or "2011 Learn iOS 5" course? It's not like Sony buying the Beatles song catalog which can be milked year after year. Because most tech courses have limited shelf life, the copyrights on the existing content library does not explain the 1.5 billion. Yes, new courses will be created but Lynda's authors are basically independent contractors. They are not handcuffed into multi-year exclusive contracts. To me, this leaves the "executive team, programming staff" and "technology platform" as the components with the most value to LinkedIn. If I do some more armchair speculation, I can think of one way to make the $1.5 really pay off: Dramatically expand Lynda.com's offerings so that it's more relevant to the general public. The 2015 Lynda.com they bought was 95% software tutorials and 5% business, but the transformation that LinkedIn envisions would be a content portfolio of 95% business, paralegal, welding, and other topics relevant to the 95% of job seekers not doing software dev work. Imagine a future where young people who talk about lynda.com (if the brand name is not gone) to say "TIL lynda used to be mostly Adobe/MSOffice/HTML courses." The current Lynda.com customer base & courses portfolio is much too niche for it to be the main reason for the 1.5B price tag. On the other hand, LinkedIn can leverage the well-oiled content production pipeline that Lynda has mastered to create other material that the non-tech population would pay for and that will potentially pay back multiples of that $1.5B. In other words, the future customers that Lynda doesn't have today will vastly outnumber the current customers and that future scenario is what LinkedIn bought into. If you believe LinkedIn thought Lynda's content was more valuable than Lynda's delivery platform, I'd like to hear your reasoning.

How can their technology possibly be worth $1.5B?

by nly 12y ago

How can their technology possibly be worth $1.5B?

Linkedin is paying for the content and ongoing business model. Lynda had $100M in revenue in 2014. Sure LinkedIn could have replicated the content but they are taking an existing business that works, building on it, and assuming that by marketing it via linkedin.com they can expand Lynda to a larger audience.

martin-adams 12y ago
Plus, they have one less key competitor in that space if they buy Lynda than to build it themselves

ghshephard 12y ago

It's not the technology, but the brand, customer base, content, and growing business that Linked In is investing in. Lynda.com has been working incredibly hard for quite a few years to build up their business, so I'm really happy to hear that they've been reward for all the hard work and excellent execution.

bdcravens 12y ago

This valuation isn't that uncommon these days, at least Lynda had revenue. Interesting, though, considering CodeSchool went for only $36M.

nl 12y ago

It's only 15 times trailing revenue (and 48% of it is paid in stock). Assuming they are showing decent growth, that's not such a big premium. They are being bought for their customers (and probably somewhat their library), not their technology.

jasode 12y ago

I disagree with the other replies saying that LinkedIn bought Lynda for the content. I still think it's the technology. Technology is not just Lynda's programming of their public facing website servers. Tech could include competency of content workflow from concept-to-release that the Lynda executive team has mastered. Generating lesson scripts; post-production of on-screen annotations, scheduling studios, etc. Technology also includes software to manage relationships with authors and pay correct royalty checks. If we break out components of Lynda.com for purposes of valuation, we might have: + customer base + content library + executive team and their programming staff + technology platform Yes, Lynda.com has an existing customer base and an obvious way is to look at the recurring revenue and make projections on it. However, I discount the customers because I'd guess that Lynda subscribers are the kind of tech savvy users that are very jaded about LinkedIn's shady business practices. It seems like the sentiment among these subscribers is to declare their separation from LinkedIn as a badge of honor. I just can't see that the executives from LinkedIn allocating the bulk of their $1.5 billion price for these customers. As for "content library", their existing portfolio consists mostly of timely courses that will become obsolete within months. How valuable is the "2009 Adobe CS4 Essential Training" or "2011 Learn iOS 5" course? It's not like Sony buying the Beatles song catalog which can be milked year after year. Because most tech courses have limited shelf life, the copyrights on the existing content library does not explain the 1.5 billion. Yes, new courses will be created but Lynda's authors are basically independent contractors. They are not handcuffed into multi-year exclusive contracts. To me, this leaves the "executive team, programming staff" and "technology platform" as the components with the most value to LinkedIn. If I do some more armchair speculation, I can think of one way to make the $1.5 really pay off: Dramatically expand Lynda.com's offerings so that it's more relevant to the general public. The 2015 Lynda.com they bought was 95% software tutorials and 5% business, but the transformation that LinkedIn envisions would be a content portfolio of 95% business, paralegal, welding, and other topics relevant to the 95% of job seekers not doing software dev work. Imagine a future where young people who talk about lynda.com (if the brand name is not gone) to say "TIL lynda used to be mostly Adobe/MSOffice/HTML courses." The current Lynda.com customer base & courses portfolio is much too niche for it to be the main reason for the 1.5B price tag. On the other hand, LinkedIn can leverage the well-oiled content production pipeline that Lynda has mastered to create other material that the non-tech population would pay for and that will potentially pay back multiples of that $1.5B. In other words, the future customers that Lynda doesn't have today will vastly outnumber the current customers and that future scenario is what LinkedIn bought into. If you believe LinkedIn thought Lynda's content was more valuable than Lynda's delivery platform, I'd like to hear your reasoning.