Not sure if you heard, but Facebook went public yesterday. The news, while no surprise to most, quickly became the subject of widespread debate, with everyone from Wall Street analysts to Silicon Valley Porsche dealers considering the financial impact of the decision. Will it be the investment of a lifetime or one to pass over, and furthermore, how much are those fortunate little staff members going to inherit from the trade?
Privacy No More
Due to federal regulations, which Zuckerberg has adamantly lobbied against in the past, any private company with more than 500 shareholders of record must go public, thus, this week, the time came for the most successful Internet startup to finally shed its wings and fly. Zuckerberg has famously held off from making his beloved enterprise an IPO, so the announcement Facebook would aim to raise US$ 5 billion in the spring signified a few things for the corporation.
First, despite what some people think, Zuckerberg is not as powerful as the government. Second, Facebook’s vast wealth and growth patterns will likely overcome whatever negative consequences people are predicting, as this is the most projected for an Internet IPO since Google raised US$ 1.9 billion in 2004, and the actual value could be much higher anyway. Lastly, with the network finally opening its books to the world, the pressure’s on to demonstrate consistent revenue and expansion. Nevertheless, considering its track record to date, this doesn’t seem to be a cause for alarm.
Presently, Facebook’s primary revenue source is advertising along with income from app shares, which it splits with partners. Theoretically then, there should be little problem maintaining momentum. Marketers, however, have been known to grumble over “lack of wall posts,” likes and fans, all translating into a shortfall in ROI compared to traditional sources like television and print. For Facebook, the solution may be to amp up simplistic ad plans and focus energy on targeting its dream database with enticing ad products and without diverting users.
By creating more substantial revenue streams and strategic ad campaigns, it’s a relatively easy fix and one that surely the enterprise can handle. Additionally, the money coming in from all these new shareholders could be put towards marketing and future lobbying efforts.
Of course, such business-minded tactics go against Facebook’s inherent purpose: to engage users and encourage ‘friendships.’ In his letter to potential investors, Zuckerberg attempts to dismiss any change in motto or attitude surrounding the shift to “company” status, describing Facebook’s maxim as the “hacker way” -- i.e. testing the limits -- and pledging to maintain this inherency with the vast array of new backers involved.
Simply put: we don't build services to make money; we make money to build better services…By focusing on our mission and building great services, we believe we will create the most value for our shareholders and partners over the long term - and this in turn will enable us to keep attracting the best people and building more great services. We don't wake up in the morning with the primary goal of making money, but we understand that the best way to achieve our mission is to build a strong and valuable company. This is how we think about our IPO as well. We're going public for our employees and our investors.”
Despite all the public hoopla, those who stand to inherent the most out of the deal are investors who backed the company pre-IPO, as well as the thousands of employees already planning their summer vacations to the South of France, and debating where they will house their new Mercedes. Furthermore, the bearing this will have on mere users has yet to be determined. As The Onion cleverly jokes, "All this and I still can't find the Brandon White I knew in college, class of 2001."