Thursday, 2 February 2012

An idea for the Facebook IPO

“People for years were asking me why aren’t we trying to make more money. I would say I’m trying to build a business for the long term and it was clearly the right strategy. I think the same is true now. Maybe there will come a time down the road when most of the industries we think should be social are already social and the primary thing we can do is optimize the amount of money we can make.”

- Mark Zuckerberg - WSJ, Oct 2011

Finally it seems that Facebook has decided to go public. Usually this is a great indication that management / various PE groups are ready to cash out and hand over some stock to suckers 'long term investors' for the 'next (lower) growth phase.'

The most notable absence from the announcement is the number of shares. This is kind of crucial to see whether it is going to be another LinkedIn squeeze where you offer a tiny part of the float to institutions and then leave a huge pool of insatiated retail clients to drive up the price. Still any multiple is likely to be both absurd and justifiable in equal measure due to the unparallelled network effect of the Facebook brand; most of the value is totally intangible and may indeed be massive and worthy of $100bn.

However maybe Zuckerberg should think about being 'cool' rather than cashing in.

Come on Mark, you already made more money than anybody needs. Don't let Wall Street 'zucker you into the deal. Break the mould. Make Facebook a mutual. (I'm sure your PE friends wont like it, but you have a fairly good record of pi$$ing on people's shoes.)

Facebook could be made a mutual instead of a corporation! They could give every profile on Facebook a share and therefore leave it owned by its constituents. This would be quite fair and rather revolutionary really since Facebook is basically a platform which allows the company to make money by profiling adverts to its members. This would mean each member would actually earn money to be on Facebook. It would become a giant partnership. Afterall members of Facebook are sharing their information - they should really claim a share of the profits. Currently Facebook simply takes your personal life and whores it out to the highest bidder.  How long before the members rise up and revolt staking a claim to own their egotistical extensions into webspace?

Probably a long time. About as long as a time as that since the era when Zuckerberg was cool and Facebook had no adverts and the only people on it were your University friends. Now your boss is on it, your parents are on it, next your kids will be on it. They say the rats always leave a sinking ship first.

So Mark, prove Facebook can still be cool, give it to the people.

(btw maybe Occupy can add this to their long and convoluted list of complaints and initiatives)

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