Startup Chatter by Donna Bogatin

LinkedIn: The latest VC fueled paper billionaire play. At a mere $1billion private equity valuation, though, Reid Hoffman’s “professional” social network is dwarfed by the $15 billion private valuation the social Facebook social network was blessed with, thanks to $268 billion Microsoft’s pocket change stake in Mark Zuckerberg’s creation, accorded in exchange for a banner ad serving display contract.

Despite the flashy press, however, neither Zuckerberg or Hoffman can easily cash out such paper markers which currently peg LinkedIn @ $43 per resume and Facebook @ $129 per friend.

LinkedIn has taken pains to assure it is “profitable” on self-reported “projected” revenues of $100 million. The purported profits, however, are likely a mere pennies per user. As is the case with Hoffman’s other direct investment, Facebook, millions of non-paying users appear to be the ones reaping the lions share of “value” from the Web 2.0 properties.

CEO Dan Nye’s “unique selling proposition” is that LinkedIn is where real business gets done, as opposed to Facebook, where the only “utility” is of the partying kind.

LinkedIn shares more with Facebook than its celebrity investor, Hoffman, however.

Just as supposed personal “friendships” on Facebook are often NOT virtual incarnations of the real thing, purported business “connections” on LinkedIn are also often no more than aggressive aggregations of virtual bodies, sought to further self-promotion campaigns rather than for real-world alliance building.

LinkedIn itself facilitates businesses that have the sole money-making mission of spam selling “top” LinkedIn connections. Despite Hoffman’s public assurances that LinkedIn is an exclusive “protected space,“ it is in his best billion dollar valuation interest to spur more and more “connections,” regardless of authenticity, or not, and he does.

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