All Things Digital

In a move BoomTown is still trying to noodle over, longtime Facebook exec Matt Cohler (pictured here) will be leaving the social networking site to become a general partner at Benchmark Capital.

Cohler, who is currently Facebook’s VP of Product Management, was one of its earliest hires and, as I wrote once, seemed like “the Yoda figure at Facebook to me.”

He will not leave the prominent social-networking company until the fall, even though Cohler is already featured on the venture capital firm’s Web site.

And, after he goes, Cohler will remain as a “special adviser”–is that like a special guest star on a television show a la Heather Locklear?–to Facebook Founder and CEO Mark Zuckerberg and senior management.

It is a great get for Benchmark to grab Cohler, of course, who will be its youngest partner ever.

And while the venture firm was the hot shop in the Web 1.0 era, it has not been as prominent a partner in the Web 2.0 space, although Benchmark does have investments in sites like Yelp and Zillow.

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Back in November, I did a video interview with LinkedIn CEO Dan Nye (pictured here) about the fast-growing, in-play business social network.

We talked about the future of LinkedIn and what it all means.

As BoomTown noted then, LinkedIn was the “‘professional’ social network, the serious cousin to the party-hearty twins of MySpace and Facebook.”

But that more dour productivity image certainly did not prevent it from getting a very happy $1 billion valuation yesterday, for what essentially is a business classified service with online presence and connection elements woven in.

And with $53 million in new funding, of course, it’s instantly a hot-ticket item!

As we reported earlier, the money will be used for acquisitions and corporate development, presumably to grow the service into a worldwide behemoth.

That is probably a good thing, as the LinkedIn IPO is further out, said Chairman Reid Hoffman, the serial entrepreneur who founded the company.

He noted to BoomTown in an interview that such an event was not “in the immediate future.”

In addition, that behemoth valuation does leave behind, for now, all the acquisition rumors that swirled around LinkedIn, which had interest from News Corp. (NWS) (owner of Dow Jones and this Web site too) and others.

Now, it is a small company with a very big price tag.

Thus, LinkedIn, which is profitable and had $100 million in revenues this year, is on its own with a nice new bag of cash to help it get along.

Here’s my interview with Nye from late last year:

In a much-expected financing, LinkedIn has joined the big funding club (Slide, Spot Runner) of late, by raising $53 million at a startling $1 billion valuation.

Why go public when you can just pretend?

Actually, unlike a lot of Web 2.0 start-ups, the professional networking site, which had 23 million active monthly members in June, has been profitable since 2006.

According to execs, it has revenues of about $100 million a year, from premium subscriptions and job listings, as well was advertising and corporate sales.

The new slug of cash comes from new investor Bain Capital Ventures, along with existing investors Sequoia Capital, Greylock Partners, and Bessemer Ventures.

LinkedIn had previously raised $27 million for a total of $80 million. Yipes!

“This additional funding will give us even more flexibility to execute on our vision for millions of professionals to increase their effectiveness by using LinkedIn to build relationships and exchange knowledge, opportunities and advice,” wrote LinkedIn CEO Dan Nye (pictured here) in a blog post tonight.

In an interview with LinkedIn’s founding CEO and Chairman Reid Hoffman (pictured here) today, he told BoomTown that the money raised would be used for corporate development and acquisitions.

“We’ll be doing small technology acquisitions to improve our service,” said Hoffman. He also noted that it was unlikely the company would be doing an IPO in the immediate future, which has been bandied about.

“We have no immediate plans” for a public offering, said Hoffman. “We still have a lot of ground to cover to grow.”

Comparing the the business-oriented LinkedIn professional network with hot social networks like Facebook, Hoffman noted: “They have page views and time on the site and are looking for a scalable economic model and we have an economic model and will focus on growing usage.”

LinkedIn certainly has been growing its coffers. It raised $5.2 million in its first round, $10 million in its second and $12.8 million in its third.

Here is a video of LinkedIn’s investors trying mightily to play down the $1 billion valuation, while also pumping it up.

You gotta love the cheerleading of Greylock’s David Sze, Bessemer’s David Cowan and Mark Kvamme of Sequoia, along with new investor Jeffrey Glass of Bain (who will join LinkedIn’s board as an observer):

Who’ll get Digg? (Odds-on favorite and sources tell me much sooner than later: Google.)

And who might make a bid for Slide, RockYou, LinkedIn, Meebo or imeem? (It might be smart for News Corp. [NWS] to double down in the social- networking space, if it can’t trade MySpace for a piece of Yahoo.)

And what about a plethora of really useful and interesting small start-ups all over Silicon Valley and elsewhere that are going to have to eventually find safe harbors when this Web 2.0 thing cools off, as it inevitably will. (AOL [TWX], Amazon [AMZN], eBay [EBAY] and, again, Google [GOOG], are natural choices.)

But not Microsoft (MSFT) or Yahoo (YHOO) if they persist in competing in this endless geek cage-match for too long.

Yesterday, more blustering bluster from Microsoft when it said, during its quarterly conference call, that it would not pay more to acquire Yahoo and might very well walk away from the deal.

My advice: Microsoft CEO Steve Ballmer should stop talking and start walking. If not, pay up and finish the deal.

And Yahoo’s CEO Jerry Yang should cooperate and stop its now-tiresome posturing (we get it, it’s worth more!).

Why?

Well, while the pair remained locked in mortal combat, a status that will continue if they actually do manage to unite and have to then conduct a doubtlessly slow-moving merger, their main rival Google and others are the likeliest to benefit every day this drags on.

Right after Microsoft made its unsolicited for Yahoo in February and it was quickly rebuffed, BoomTown suggested in a post that the software giant move on quickly and use its tens of billions to buy up the choicest and most innovative companies in the digital space.

What I wrote then bears repeating:

And what are the other options Microsoft might have that are actually better than scooping up Yahoo, especially to serve its Captain-Ahab obsession with harpooning the Great White Whale of Google?

If that is the actual goal, then many point out that a Yahoo win does not really frighten Google all that much, since the search giant has done just fine competing against both already.

In addition, many noted that a union of the pair, which would distract both Yahoo and Microsoft, might not be the magic bullet needed to fell Google from its high perch. And then what?

One idea I have heard, for example, was that Microsoft take its $44.6 billion in cash and stock it plans on spending on Yahoo and go on a shopping spree of the Web 2.0 companies all around Silicon Valley and all over.

And not just a few–lots and lots of them. And, more than one person suggested, it should start with Facebook, even at that wacky $15 billion valuation that Microsoft itself validated when it invested $240 million in the social-networking site recently.

“So what if it is only worth $10 billion or even less,” said one person. “They could lose a lot more on the risk of buying Yahoo.”

With the $30 billion left over, it could be like Christmas in July for the geeks and venture firms of Silicon Valley. But Microsoft could scoop up a lot of good stuff, even if prices are high.

Here’s a list: LinkedIn. Digg. Flixster. Slide or RockYou. Veoh. WordPress. Sphere. Sugar. Some international stuff. And more.

Then, some noted, Microsoft would have to give massive financial incentives to those entrepreneurs to stay and thrive. Most importantly, it would have to keep its Redmond hands from interfering.

Now that would send shivers up the spine of [Google's] Larry and Sergey.”

It still would. So maybe, as it has threatened yesterday, Microsoft should run and not walk.

Please see this disclosure related to me and Google.

The rumors have been a-flyin’ recently about the reported talks between LinkedIn and News Corp.

Billing itself as the “professional” social network, the serious cousin to the party-hearty twins of MySpace and Facebook, the LinkedIn service is squarely aimed at those with a task in mind from networking to recruiting to career advancement.

In many ways, it is trying to be a business classified service with online presence and connection elements woven in. LinkedIn execs, in fact, throw around the term, “productivity tool,” much in the same way Facebook likes to talk about the joys of “SuperPoking” (by the way, not so joyful to adults).

With 16 million users from all sorts of sectors and spread out globally, LinkedIn getting a look-see by News Corp. makes a lot of sense. It just bought Dow Jones (owner of this site) and its flagship business newspaper The Wall Street Journal, and owns many newspapers, all of which need an online answer to the diminishing print employment-classified business.

In any case, I talked to newly installed LinkedIn CEO Dan Nye recently (before the recent rumors) about the company:

(I still am having problems with the Brightcove player, so I uploaded the video to YouTube.)

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It’s obvious at this point that acquisition deals are to Web 2.0 start-ups as IPOs were to Web 1.0 ones.

As far as bubbles go, I suppose that’s fine, since average investors are safe from the machinations of investment bankers and venture capitalists this time and the only ones at risk are the big companies overpaying by doing the acquiring.

Are Plaxo and Digg among the latest targets?

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