Infographic: Employees of Social Media Giants Are Cashing Out

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With valuations for social media companies like Facebook, LinkedIn and Twitter soaring on the secondary markets, it's hard to blame the earliest employees for selling some of their stock. They want to unload some of their riches just in case (before?) the bottom falls out like it did in that last great Internet age. It's not always easy, but it is possible. Facebook has even gone so far as to help facilitate the sale of early shares at an institutional level, transferring shares held by those inside the office to private investors on the outside.

This new infographic from Focus looks at how employees at the social media giants are cashing out and, more importantly, how their actions could be affecting the valuations of the companies they work for.

Infographics are always a bit of a hodgepodge of statistics culled from a variety of sources. Here, we sort through the clutter and pull out some of our favorite facts and figures:

  • Interest in selling social media stock (34 percent in the second quarter of 2011) has far outstripped interest in selling stock in retail and commerce (6.1 percent), gaming (1.6 percent) and software (7.7 percent). The industry demand for these stocks is equally high as many social media employees sell what stocks they can.
  • From the last quarter of 2010 to the first quarter of 2011 there was a 22 percent increase in completed transactions by ex-employees. At the same time, there was a 24 percent decrease in completed transactions by current employees.
  • A majority of those completed transactions came from former employees of Facebook. They accounted for nearly 40 percent of transactions, more than any other social network. LinkedIn's employees account for seven percent of transactions and Etsy's employees for another five percent.
  • Since Facebook's valuation has soared to nearly $50 billion, employees who own stock options and have been at the company since its early years are eager to profit. Seeing this, Facebook helped to broker two sales for its employees, selling $100 million in stock to Digital Sky Technologies in 2009 and another $198 million to T. Rowe Price in 2011.
  • Even more so than Facebook, Groupon has seen not only its early employees cash in their stocks, but their early investors and founders. The company has been quickly losing money.
  • What is driving this trend? Fewer venture-backed start-ups are going public and those that do are taking much longer. In 1999, the length of time to IPO averaged 4.7 years; in 2009, that number had jumped to 10 years.

Check out more Infographics on the Technology Channel.

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Nicholas Jackson is an associate editor at The Atlantic, where he oversees the Health channel. A former media aggregator for Slate, he has also worked for Encyclopaedia Britannica, Texas Monthly and other publications.

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