Wahoo. The day has finally arrived. Zuckerberg is now truly backed into a corner. Facebook has reached the limit of private investing (500 investors) and must, by law, go public.
From my POV, this is such a non-event. FB already dominates the social media landscape and it’s profitable. But once it goes public, it will face significant challenges to keep its initial valuation and grow the stock’s performance.
Facebook Challenge 1
Zuckerberg will now have a bazillion bosses who will be able to vote with their bucks, not just their eyeballs. Given FB’s penchant for making UI changes without much dialog with the users, I expect FB’s stock will be for an even bumpier ride than Netflix—so fasten your seatbelts (to paraphrase Bette Davis). We all remember what what happened to Netflix when they decided to split their DVD and streaming businesses (do you ever wonder if the person responsible for that debacle is still employed there?). Netflix lost real revenue, significant stock value and most importantly—the trust of its customers. The same fate seems somehow inevitable (IMO) for Facebook.
Facebook Challenge 2
How do they grow the Facebook user base even bigger? With one-third of the world already using Facebook, how do they take growth to the next level? Without pissing off users with intrusive advertising or UI bungles?
Facebook Challenge 3
How will they grow advertising revenues without alienating users? FB already collects so danged much information. By going public they will have to be more transparent than ever about what user info they share with advertisers — no more hiding behind the “private business” curtain. As it is, Google’s newly consolidated privacy coupled with their blatant attempts to link all user behavior among all Google services is doing more than just raising eyebrows. The spectre of Big Brother is never far behind. And while the battle between these 2 advertising giants will be ferocious, that’s neither new or earth-shattering.
Which is why this is all such a, excuse me, YAAAAAWWWWWWN, for me.
For yet another POV, watch Yahoo! Breakout’s Matt Nesto and Jeff Macke as they discuss Facebook’s S1 filing and what they think it means.
