El 4: Will the IPO Change Facebook Forever?

jueves, 2 de febrero de 2012

Will the IPO Change Facebook Forever?

Journalists can find some pretty weird things interesting, but I never thought a 207-page government-mandated document would keep me turning the pages.

That changed Wednesday, with Facebook's mammoth S-1 filing. It wasn't so much an SEC prospectus as it was a peek into the personality of Mark Zuckerberg — and a field guide to the beast he's responsible for. (The social network, that is, not the dog.)

It was all there, Zuck's soul laid bare: his fears of everything that could harm the company (who knew the SEC could act as a therapist?) as well as his dreams for how it could change the planet. "Facebook was not originally created to be a company," the founder wrote. "It was built to accomplish a social mission — to make the world more open and connected."

To which I think we can safely reply: Mission accomplished.

The scope of Facebook has long seemed breathtaking, but this document still made our jaws drop. There are, it said, 100 billion friendships on Facebook. In other words, the social network has fostered more than 14 connections for every man, woman and child on the planet.

It's the Money, Dummy

But lest we forget, an S-1 is not a mission statement. It is a means to one end alone: making money. And the sweet smell of greenbacks could be detected on every page.

Here is Zuckerberg, the soon-to-be $28 billion man, taking $700,000 worth of plane rides a year. There goes COO Sheryl Sandberg, who made more than $30 million in 2011. And everywhere are the names who are going to cash in, big time: Morgan Stanley, Goldman Sachs, Accel Partners, Sean Parker, Bono.

Yes, these are richly-deserved rewards, more or less. The employees have worked very hard for them. The VCs took a risk. And the banks take their cut for sailing the IPO ship out of harbor; that's how the system works.

But the dollar-drenched pages serve as a timely reminder: Everything is going to be different when the company goes public later this year. From that point on, Facebook will have a solemn obligation to create more value for shareholders.

No doubt the social mission will continue to be important. But as a public company, Facebook must try its damnedest to make money before all else. I'm not saying that's right or wrong; I'm saying it's the law.

The Long-Term View

What remains to be seen is how that focus will affect us Facebook users on a day-to-day basis. Probably not a lot, at first. But how about five or ten years down the line?

I used to think Google had made the transition to public company unscathed. The DNA of "don't be evil" ran deep in the organization. But the recent kerfuffle over Search Plus Your World — which seems a fairly naked bid to push Google+ results above more relevant ones — made me think twice.

Google's founders also wrote a lofty statement of their social mission prior to the IPO.

Would Google be so maniacally focused on Google+, to the detriment of its search product, if it weren't legally required to make more and more value for shareholders? Without a time machine that can transport us into an alternate universe where Google remained private, it's impossible to say for sure. But my gut says it would not.

The social media landscape is constantly remaking itself. That was another message the S-1 drilled home: competition, technology and infrastructure change all the time. Tiny but vital decisions must be made by Facebookers every day. And the ultimate arbiter of those decisions is about to change from "what makes sense for our social mission" to "what makes sense for our shareholders."

The Facebook faithful can only hope that those two goals remain entwined for many years to come.

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"Decisions by advertisers to use our free products, such as Facebook Pages, instead of advertising on Facebook."

"Loss of advertising market share to our competitors."

Image courtesy of iStockphoto, travelif

"We fail to introduce new and improved products or if we introduce new products or services that are not favorably received."

"There are changes in user sentiment about the quality or usefulness of our products or concerns related to privacy and sharing, safety, security, or other factors."

Image courtesy of iStockphoto, domin_domin