Edmodo, Facebook for classrooms, lands $15 million, top advisors

A Silicon Valley education start-up is getting a big vote of confidence from two venture capitalists who have veritable PhDs in social networking.

Reid Hoffman, co-founder of LinkedIn, and Matt Cohler, an early employee at Facebook, are joining the board of Edmodo. Their respective venture capital firms, Greylock Partners and Benchmark Capital, are leading a new $15-million funding round.

"Edmodo has emerged as the engine in the classroom for content sharing, collaboration and assignments," said Cohler, a general partner with Benchmark Capital. "Edmodo works and students get that, teachers get that."

And that has helped the Facebook-like service catch on in the classroom. More than 5 million teachers and students in 60,000 schools around the globe use Edmodo. The site's usership has doubled in the last three months. 

Hoffman, a managing partner with Greylock, said Edmodo is emerging as a key network. Just as Facebook is the social graph and LinkedIn the professional graph, he said, "Edmodo is the educational graph." 

Even as technologies in Silicon Valley have radically transformed our lives and industries, they've been slower to make a major dent in the 21st century classroom. Surveys show that most students still use technology more outside the classroom than in it. And while 73% of teachers say digital content is essential, only 11% of districts are using it, according to a survey of IT professionals.

In their last meeting before he died, Steve Jobs spoke with Bill Gates about the future of digital technology in the classroom given how little headway it had made. They agreed that "computers had, so far, made surprisingly little impact on schools -- far less than on other realms of society such as media and medicine and law," according to Walter Isaacson's biography of Steve Jobs.

Rob Hutter, chairman of Edmodo and a managing partner with Learn Capital, contends that 2011 marks the tipping point with high-speed Internet in 95% of schools and the proliferation of mobile devices, which are more affordable and have longer battery life and the ability to create feature-rich, sophisticated educational initiatives in the cloud.

Edmodo is the brainchild of Nic Borg and Jeff O'Hara, IT professionals from a Chicago-area school district who wanted to bring the connected way people live their lives into the classroom. Most school districts block social networks, but Borg and O'Hara banked on the idea that a safe, secure social network that allowed teachers to network with one another and with students could fly.

How it works: K-12 teachers sign up for free, then add their students to create classroom communities that work on every type of personal computer and mobile device, Hutter said. Teachers can then send messages about assignments, post materials such as photos and videos related to the assignments, conduct quizzes and discuss topics covered in class. Teachers can also share educational content and best practices with each other. Edmodo has even offered interactive lessons on polar bears.

"This is going to be a really big, important network," Cohler said. "The more people join, the better the service gets for everybody."

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Images: Student profile on Edmodo (top), teacher profile (bottom). Credit: Edmodo

LinkedIn shares slump after insider sell-off

Silicon Valley is hoping a wave of newly minted millionaires will pump up the local economy with purchases of houses, cars, designer clothes, you name it.

Restrictions on selling stock are lifting for insiders. The first Internet company to generate some serious wealth for early investors and employees is LinkedIn. Insiders are typically prohibited from selling shares for six months after an IPO.

But LinkedIn isn't meeting with the same kind of euphoria on Wall Street.

Its shares have sunk to the lowest level since June as insiders sell off stock for the first time since the professional networking company went public in May.

The concern: LinkedIn, which floated a small percentage of its shares in the IPO, is now trading at an unrealistic valuation.

Shares in LinkedIn fell below $70 on Tuesday. LinkedIn has fallen 23% since early November when it said it would sell additional stock in a secondary offering.

LinkedIn's IPO was the biggest for an Internet company since Google's in 2004. The stock more than doubled on its first day of trading.

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Photo: Reid Hoffman, co-founder and chairman of LinkedIn Corp., left, and Jeffrey Weiner, chief executive officer of LinkedIn, center, stand with traders on the floor of the New York Stock Exchange on May 19, the first day of trading. Credit: Michael Nagle / Bloomberg 

 

LinkedIn raises $88 million in stock sale

LinkedIn has raised $88 million in a stock sale of 1.27 million shares.

Investors and insiders also cashed out 7.5 million shares in an offering completed late Wednesday.

This marked the first time since the company's blockbuster initial public offering in May that insiders were permitted to sell shares. The shares were sold at $71 each.

LinkedIn shares rose 5% to $74.92 Thursday even after the professional networking company added some 8 million shares to the market, showing that investors still have a strong appetite for social media.

Roughly 9 million shares were sold in the IPO, so the secondary offering nearly doubled the volume of shares available on the market.

The amount raised -- $88 million after more than $2 million in fees -- fell short of the $100 million the company was targeting.

LinkedIn said it planned to use the money to fuel expansion of its offerings around the globe. The company had a loss in the third quarter, its first as a public company, even as its revenue doubled, raising concerns that it's spending too heavily on growth.

LinkedIn went public in May in the biggest IPO for an Internet company since Google's in 2004. The stock more than doubled on its first day of trading.

The IPO market is coming to life after months of economic turmoil and market volatility have shelved plans at many companies. Today, Angie's List made its public debut and Yelp filed for an IPO.

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Photo: LinkedIn at the New York Stock Exchange. Credit: Valerie Caviness / LinkedIn/NYSE Euronext

LinkedIn insiders preparing to unload shares

The LinkedIn lockup is almost over and shareholders are winding up to sell more than 6.7 million shares. They are looking to realize gains in the stock, which has risen 74% since its initial public offering in May.

Bain Capital is unloading its entire stake in the professional networking company now that the lockup period restricting insider sales is expiring, according to filings with the Securities and Exchange Commission. Bain led a $53-million investing round in LinkedIn in 2008 which valued the company at more than $1 billion.

LinkedIn Chief Executive Jeff Weiner, its chief financial officer Steven Sordello and director David Sze are each selling 10% percent of their holdings. Chairman and company co-founder Reid Hoffman isn’t selling any shares. His stake in the company is worth more than $1 billion.

LinkedIn insiders will hit the sell button Nov. 21 when the company's six-month lockup ends. The sales will nearly double the number of shares available on the stock market. LinkedIn has benefited from the limited number of shares currently trading. Shares slid 7% to $72.80. LinkedIn closed as high as $109.97 in July but fell to the low $70 range in August.

LinkedIn also said it plans to sell almost 1.3 million shares to propel its growth.

LinkedIn's initial public offering was the biggest tech IPO since Google in 2004. It posted a loss in the third quarter as its revenue more than doubled. It was its first as a public company, as LinkedIn spends to expand its offerings around the globe. The company has more than 135 million members.

Analyst Mark May at Barclays Capital says he remains bullish on LinkedIn. 

"We believe the uniqueness of its global user base, the competitive moat created by network effects, the significant opportunity to expand share in both the corporate recruiting and advertising sectors, and the meaningful upside potential in margins all point to an ability for LinkedIn to sustain hyper growth and recognize significant margin expansion over time," May wrote in a research note. 

LinkedIn also announced a new app on Tuesday that with one click uploads to your phone a business card and all its contents.

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Photo: LinkedIn founder Reid Hoffman, center, and Chief Executive Jeff Weiner, right, after the opening bell at the Big Board as the company went public. Credit: Mike Segar / Reuters

LinkedIn third-quarter loss disappoints investors

LinkedIn recorded its first quarterly loss since the online professional network's initial public offering in May.

The loss wasn't as steep as some analysts had predicted, but the stock fell as much as 8% in after-hours trading. It came as the company increased spending on research and development to attract more users around the globe.

LinkedIn lost $1.6 million, or 2 cents a share. It had earnings of $4 million, or 2 cents, in the third quarter of 2010. If not for certain items, LinkedIn said it would have earned 6 cents a share. Revenue more than doubled from last year to $139.5 million, more than the $128 million analysts had forecast.

Total operating costs more than doubled to $134.9 million as LinkedIn opened an office in Tokyo and bought IndexTank to improve search on its site.

This is an especially important quarter for LinkedIn because employees and other insiders can begin selling their shares starting Nov. 21. Investors may be nervous that the end of the lockup will usher in a tidal wave of sales that could cause the stock to drop.

LinkedIn made its hotly anticipated public trading debut before the economic turbulence that has delayed the IPOs of other Silicon Valley companies such as social gaming company Zynga. As such, it's a bellwether for the sector. Groupon, the daily deals company, is set to price one of the year's most closely watched IPOs on Thursday.

LinkedIn maintained its pace of adding about two new members a second, finishing the quarter with 131.2 million members. It continues to trade at about twice the $45 price it fetched at its IPO. It also hosted a town hall meeting on jobs with President Obama last month.

LinkedIn said Thursday that it has filed a registration statement with the SEC to sell more stock. The company said it planned to use the proceeds for "working capital and general corporate purposes." 

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Photo: LinkedIn founder Reid Hoffman, center, and CEO Jeff Weiner, right, applaud after the opening bell at the Big Board as the company goes public. Credit: Mike Segar / Reuters

Is Facebook looking to challenge LinkedIn in job postings?

Facebook has struck a partnership with the U.S. Labor Department to help the unemployed find jobs.

The partnership harnesses the popularity of Facebook, and the Labor Department wants to expand it to Twitter, LinkedIn and other social networking sites to provide resources to job seekers as the nation wrestles with a 9.1% unemployment rate.

But does the new partnership position Facebook to move beyond social into professional networking?

Pundits have long speculated that Facebook, with its more than 800 million users, would eventually use its social networking dominance to challenge LinkedIn on the job-recruiting front.

LinkedIn Chairman Reid Hoffman shrugged off the notion of Facebook as a competitive threat Wednesday at San Francisco's Web 2.0 Summit.

Asked whether LinkedIn would be held back by its demographic –- the average user is in his or her early to mid 40s –- Hoffman retorted:

"You mean, like someone who could give you a job?" Hoffman said.

His response got quite a few chuckles from the audience.

A year ago, LinkedIn Chief Executive Jeff Weiner said LinkedIn keeps Facebook away with keg stands.

"While many of us in college probably were at parties having a good time, doing things like keg stands, or being exposed to keg stands, I don't know that many of us would look forward to having a prospective employer have access to picture of those events," Weiner said during an onstage interview at the Web 2.0 Summit last year.

Or, as conference host John Battelle added helpfully, "bong hits."

In other words, LinkedIn's position: People want to keep their personal and professional identities separate. If Facebook is a place for your friends, LinkedIn is a place for your professional connections.

But does that hold true now that Facebook has begun to make it easier for its users to share status updates, photos and other information just with the friends they designate? And what of Google's ambitions for its social network Google+?

All of which is not to say that LinkedIn is not plugged in. It is coming off a successful initial public offering and boasts more than 120 million users.

And it has its own close ties to the Obama administration. President Obama made his case for his jobs bill in September in a town hall forum with Weiner in which Obama took questions about creating jobs and goosing the economy. The forum was similar to one held at Facebook in April.

Facebook downplayed the significance of rolling out resources for job hunters for the first time on Facebook.

"We are simply creating a central location for employment services for people who are on Facebook, because we want to connect job seekers to the resources available to them. This is not a competitive service, it's a public service," Facebook spokesman Andrew Noyes said.

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Photo: LinkedIn Chief Executive Jeff Weiner and President Obama field a question from the audience during a town hall meeting in September at the Computer History Museum in Mountain View, Calif. Credit: Stephen Lam / Getty Images

President Obama to hold town hall at LinkedIn

President Barack Obama made friends with Facebook in April by holding a town hall event at the social networking company's Palo Alto headquarters.

On Monday he will return to Silicon Valley for a second town hall event at the home of LinkedIn, the Web's largest professional networking service.

The president will discuss jobs and field questions about the economy, according to a note on the White House website.

LinkedIn users can post questions for the president on the White House LinkedIn page.

This isn't the first time Obama has fielded questions on LinkedIn. He did so during his 2008 presidential campaign when social media helped him reach voters.

This visit is part of a three-day West Coast swing with events in the Bay Area, Los Angeles, San Diego and Seattle.

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Photo: "My name is Barack Obama, and I'm the guy who got Mark to wear a jacket and tie," President Obama says in April when he appeared with Facebook CEO and founder Mark Zuckerberg at the company's headquarters in Palo Alto. Credit: Jim Young / Reuters

LinkedIn 'social ads' will stop displaying users' names, photos

LinkedIn will no longer turn its users into unwitting cheerleaders for products and services, the professional networking site said Thursday.

LinkedIn users began protesting this week a new form of advertising on the site called "social ads" that  used individual user's names and photos to promote products or services they recommended or companies they followed.

The company said Thursday that it would stop displaying users' names and photos in ads. Instead, social ads will tell you when people in your network recommend a product or follow a company.

LinkedIn is not the first social networking site to tap into the power of recommendations from friends. And it's certainly not the first to automatically include members in features. But the practice of making users opt out, instead of asking them to opt in, has alarmed privacy advocates and officials in the United States and in Europe.

"What we've learned now, is that even though our members are happy to have their actions, such as recommendations, be viewable by their network as a public action, some of those same members may not be comfortable with the use of their names and photos associated with those actions used in ads served to their network," Ryan Roslansky, a director of product management at LinkedIn, said in a blog post.

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Screen shots: LinkedIn's social ads before (top) and after (bottom)

How to opt out of LinkedIn sharing your data with third parties

Consumers are protesting changes to account settings on LinkedIn that automatically give permission to third parties to access their information or use it in ads.

Here's what's going on: LinkedIn notified users last month that it was making some changes. You can read the blog post on privacy policy changes and another post on social ads. 

Basically, the professional networking site now allows third parties -- people, products or services you have recommended on the site -- to use your name and photo in ads unless you opt out of a default setting.

It also allows LinkedIn partners to send you promotional content as part of a marketing or hiring campaign –- again unless you opt out of the default setting.

Ditto for third-party applications that have access to your data on LinkedIn unless you opt out. LinkedIn says these are applications you either installed or granted access to while you were using LinkedIn.

LinkedIn spokeswoman Krista Canfield said in an emailed statement: "The privacy and trust of our members is central to what we do at LinkedIn and, as such, we strive to remain true to our commitment of providing our members consistent, clear and easy-to-use controls for their LinkedIn account settings."

For those who want to opt out of sharing with third parties and social ads, here are step-by-step guides.

To opt out of "social advertising:"

1. Click on your name in the upper right corner. Select "settings" from the drop-down menu.

2. Click on "account."

3. Click on "manage social advertising."

4. Uncheck the box next to "LinkedIn may use my name, photo in social advertising" and click "save."

To change your settings for promotional content from partners:

1. Click on your name in the upper right corner. Select “settings” from the drop-down menu.

2. Click on "account."

3. Click on "email preferences."

4. Click on "turn on/off partner InMail."

5. Uncheck the boxes and click save.

To change your settings for the data third-party applications can access:

1. Click on your name in the upper right corner. Select "settings" from the drop-down menu.

2. Click on "account."

3. Click on "groups, companies and applications."

4. Click "view your applications."

5. Check the boxes next to any applications you don't want to access your information.

6. Then click on "Turn on/off data sharing with 3rd party applications."

7. Uncheck the box "Yes, share my data with third party applications."

8. Click "save changes."

Hat tip to Steve Woodruff

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Photo: Reid Hoffman, co-founder and chairman of LinkedIn, left, and Jeffrey Weiner, chief executive of LinkedIn, center, stand with traders on the floor of the New York Stock Exchange on  May 19, when the company began being publicly traded. Photo credit: Michael Nagle / Bloomberg 

Trouble for tech in market sell-off

The double-whammy of the S&P downgrade of U.S. government debt and double-dip recession fears is turning into a real downer for tech stocks.

The Nasdaq fell nearly 7% on Monday, even peeling some of the glow from Wall Street darling Apple.

But few tech companies have been as hit as hard as LinkedIn in the market sell-off. The first major U.S. social networking company to go public beat analysts' estimates for second-quarter earnings last week. But the stock fell more than 17% in trading Monday.

LinkedIn was not alone. Other tech companies that recently went public also fell. Does that mean the initial public offering window for tech companies could slam shut again as investors look for safer bets?

"I don't think anyone has a good answer on that yet, it's too raw and too new,” Deutsche Bank communications technology analyst Jonathan Goldberg told VentureBeat. "In general, market conditions are going to make it hard for any IPO to come out."

That could spell trouble for social gaming company Zynga and daily deals website Groupon, both of which have filed to go public. It could also postpone IPOs from other prominent players such as Yelp.

That, in turn, could have a chilling effect on the tech boom in Silicon Valley that has seen investors throw billions at start-ups.

Could another global meltdown trigger a repeat of Sequoia Capital's 2008 "RIP Good Times" presentation? That's when the venture capital firm invited about 100 executives from its portfolio companies to give them a sobering overview of what the economic crisis meant for Silicon Valley and their start-up dreams.

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Image credit: Sequoia Capital