What has been so fascinating about watching the Facebook IPO is not what we’ve seen, but what we haven’t seen and what we don’t yet completely understand (at least what I don’t yet completely understand).
On Friday (day one), we didn’t see the broad market acceptance of Facebook as some predicted. Did Mark Zuckerberg and hundreds (thousands?) of others instantly become gazillionaires, you bet. Were their gazillions as big as predicted? Nope. In the rough-and-tumble of Wall Street, that tells us something.
On Monday (day two), we saw what some could claim was market rejection of Facebook (albeit it one day’s worth). The stock fell 11% amid complaints about overvaluation, trading errors, bungled marketing, etc. Finger pointing aside, the Facebook gazillionaires were now worth 11% less than on Friday. That tells us something.
Again, I am no technology or financial expert.
Here’s what I know.
- Going public mandates accountability to shareholders (investors) … a whole new form of continuous pressure to generate profit. And, this pressure builds quarterly.
- In order to realize a profit, Facebook has to generate more revenue more consistently than ever before.
- To do this, there will be changes in the Facebook model that we now know to an operating model with more potential to generate revenue and, thus, profits.
Here’s what I really don’t know.
- How will the changes that must come to Facebook affect me and, as the owner of a strategic communications consulting firm, what we do for our clients?
- Will the changes that must come add a consistency and predictability to Facebook as a valuable tool for growing market share (if so, this will be welcomed)?
- Will the pressure to generate revenue and profits make Facebook just another overcrowded channel for advertisers, albeit a really big one?
- Will Facebook’s appeal to individuals’ sharing information be less, making it less appealing to businesses who also want to reach the more than 900 million users?
All we really know for sure is that now, after Facebook went public, it will change; that Facebook’s going public went not as well as expected means it will be under even more pressure to produce; and, with this added pressure Facebook will likely change more rapidly.
(BTW – congratulations, Mr. and Mrs. Zuckerberg.)