ReadWriteWeb

I've learned a lot about startup culture since I started writing about it at the beginning of January, and there is a trend that I have noticed that is different from the stereotypical outsider's point-of-view - one that I had not too long ago. There seems to be a growing number of companies that are holding off from either being bought out or going public because they are more vested in the interests of their company or their idea than they are about having a big payday.

If there is any doubt about the social Web moving into the enterprise, then the news today from Jive Software has to make even the hardest skeptics start to wonder.

The Portland, Oregon company that has built its success on providing a social layer to the enterprise is pursuing a path that may lead it to a public offering.

Fueled by venture capital, the company said today that it is looking for a new CEO.

An initial public offering, or IPO, is when a company opts to trade its shares publicly on the stock market - a decision that can be a risky investment. At times, unprofitable startups go public in hopes of reversing their situation, but most of the time IPOs come from the profitable startups looking to expand their value. Based on some fascinating new data visualization tools released today from Tableau Software (see note below), an intriguing trend has emerged among profitable and unprofitable IPOs.

There is a lot of chatter in the blogosphere about the recent $100 million investment in Twitter at a $1 billion valuation, but most of it based on speculation. Twitter and Facebook are private companies. You cannot get the facts simply by typing a stock symbol into Yahoo Finance. Our mission at ReadWriteWeb is to add to the facts, not just the speculation. Rather than posting confidential information that someone has leaked to us, we prefer to start with publicly available data. That takes a lot of leg work and crawling through regulatory filings. Luckily, a firm in this industry does that professionally: the VC Experts Valuation and Terms database. It has given us access to and permission to publish the investment facts, as publicly recorded, for both Twitter and Facebook. We could not refrain from a bit of game theory speculation on how this could play out, and we invited a specialist in startup deals to add his speculation as well. But let's start with the facts.

There doesn't seem to be a week that goes by without someone lamenting the sorry state of the venture capital market or our favorite exit ramp: the IPO market. Granted, the overall number of offerings in the past 7 to 8 years has been paltry. Notable individual exceptions are Google (2004), SynchronOSS Technologies (2006) and, more recently, Open Table and SolarWinds (both 2009). But let's face it: if yours is a venture-backed company, you have had higher odds of being struck by lightening than going public in this first decade of the 21st century.

Online auction giant eBay, rumored to be shopping around for a buyer for its 2005 acquisition of voice-over-IP phone service Skype, announced in a press release today that it has now decided to prep the ground for a 2010 Skype IPO launch. The announcement also says that this is one of several outcomes considered for Skype when eBay president John Donahoe became CEO early in 2008.

Yesterday we analyzed the financials of the 7 publicly traded Internet Big Cos. There was nothing bubbly there, with an average PEG of 1.4.

So the next stop is the "middle 20". These are publicly traded web technology stocks with a market cap over $1 billion. In our analysis below, more than half have a PEG below 1.0, which tends to signal "bargain opportunity" to investors. (caution: of course that is only a starting point for analysis, there could be some real dogs in there). Check out this chart:

Here are some of the highlights from the week's Web Tech action on ReadWriteWeb. On the product side we reported on Nokia's buyout of the open source mobile OS Symbian, reviewed a "memory augmentation" service and a semantic search engine, and looked at what LinkedIn's strategy tells us about the IPO market. On the trends side, we contributed our 2 cents to Yahoo's board, investigated another Wikipedia controversy, analyzed the capacity of web 2.0 to bring about "change", and explored the online video market.

1. Businesses that can cut costs for clients can IPO in a recession. LinkedIn cuts the cost of business development, recruiting and finding experts.

2. The best businesses IPO when markets are down. It shows strength. Who cares if it takes 12 months for markets to pickup? Insiders will be locked-in for a while anyway.

3. Facebook cannot IPO. Their $15bn valuation won’t wash with public investors and they can hardly do a down round. So LinkedIn gets the mindshare and public currency to win the next round.