

Zuckerberg's Big Facebook Mistake - sampsonjs
http://www.forbes.com/sites/nathanvardi/2012/07/27/mark-zuckerbergs-big-facebook-mistake/

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ramblerman
The IPO has thus far been a disaster for overy eager investors and maybe
that's where the hate from Forbes originates, but the notion that it changes
much for Zuckerberg himself is laughable.

"[Facebook] still needed money", is just so wrong. The IPO was about
Zuckerberg and close colleageaus being able to cash out a little bit and
overcoming the shareholder limit.

I highly doubt it has any impact on his plans for facebook. A pretty poor
assesment by a publication like "Forbes"

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jfb
The mistake, if it turns out to be one, was not in shunning capital markets,
but rather, building a business that required capital on a scale that only the
capital market could provide.

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Zarkonnen
Quite. I think the whole article can be abbreviated to "Facebook large but not
very profitable".

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bsphil
Which hasn't been news for years in the first place.

Way to go, Forbes.

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caycep
an IPO is an IPO - aside from all the hyperventilating over share price over
these first few weeks, Zuck and Co now have raised the capital they need.
Let's see how things are in one year. Facebook's long term prospects will be
built on the quality of their products, not the jitters of the short term
investor.

~~~
blurpin
totally agree with you. One major point of that article was that, had Facebook
IPO'd sooner, it would have been better off with the discipline that comes
with being a public company. Baloney. I can think of a ton of companies that
have manipulated their way under the watchful gaze of Wall Street. this follow
up post makes some great counter points:

[http://www.forbes.com/sites/tomiogeron/2012/07/27/post-
ipo-f...](http://www.forbes.com/sites/tomiogeron/2012/07/27/post-ipo-
facebooks-bigger-mistake-would-be-obsessing-about-wall-street/)

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vwoolf
I stopped reading here: "The roadblocks he faced in building the world’s
biggest social-networking company were tiny, like an overdramatized civil
lawsuit" and also wished for a "downvote" button. This trivializes what it
takes to build a multi-billion-dollar company—any multi-billion-dollar
company.

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bostonscott
When it came to monetizing search, Google was lucky in that someone else
already figured out how to do that (GoTo.com). No comparably effective model
exists for monetizing high traffic websites (social media or otherwise),
despite many attempts over the past two decades. Not even close.

If Zuck took Facebook public 5 years ago, they would have gotten much less
money, and they would have been distracted by investors calling for them to
focus on building out that business model rather than attracting users - and
Zuck may have lost controlling power in the company (less money + less users =
less leverage for Zuck).

~~~
cube13
>If Zuck took Facebook public 5 years ago, they would have gotten much less
money, and they would have been distracted by investors calling for them to
focus on building out that business model rather than attracting users - and
Zuck may have lost controlling power in the company (less money + less users =
less leverage for Zuck).

Would this be a bad thing? The entire reason that Facebook needed to go public
was because they needed the money to pay off their investors.

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ramirez60
That's not why FB went public. They went because they had to...

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uptown
Going public wasn't required by their investor count, but they would have had
to have audited financials, so the benefits of remaining private would have
been reduced anyway:

<http://www.quora.com/Why-does-Facebook-need-to-go-public>

~~~
sbov
Facebook passed the 500 shareholder mark back in 2008 and got an exemption.

I've had no luck finding out why they then had to observe the rule by 2012
though.

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mohawk
Passing the 500 mark means you have to hand in SEC filings, nothing more.

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jusben1369
There's a little hyperbole and overly simplified statements in here but this
article really hit the nail on the head. Zuckerberg missed the most explosive
part of his curve to go out by waiting so long. He took onboard investors who
did not push the company - they knew they were good for a great exit no matter
what. Now he's going to end up with low morale and scrambling to mature the
platform.

He danced with the Devil and right now the Devil is up on points going into
the 7th round.......

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momma-joe
You can have the greatest product in the world, if you don't make money from
it the company is worth zilch! stepping out of SV shows these companies what
the real world is. You can take that to the bank.

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Me1000
Sure, Facebook had a billion dollars in revenue last quarter.

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pooriaazimi
Only half of it was profit though:
[http://www.gmanetwork.com/news/story/267151/economy/finance/...](http://www.gmanetwork.com/news/story/267151/economy/finance/facebook-
reports-157m-q2-loss-operating-profit-of-515m)

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InclinedPlane
Mistake?

For Facebook investors perhaps. But not for Zuckerberg. He gamed the IPO
system like a champ, extracting far more hard cash from investors and
financial institutions than he should have been able to based on the
fundamentals of his company.

Consider. Here's this company that is nominally a "publicly traded
corporation" that still has over 50% of the stock in one person's hands, Zuck.
And it's sitting on a pile of many billions of dollars of cold hard cash
(representing well over a decade of potential accumulated profits at present
levels). All of the early investors and employees have cashed out to the tune
of millions or even billions per person. Meanwhile, Facebook is using its
corporate cash hoard to buy up competitors and fill out the empire.

They played this game remarkably. They played the banks, they played the
financial analysts, they played the investors. They've got theirs and they are
far more secure of a company than they were before the IPO.

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gojomo
Facebook is making money and has a giant warchest from the IPO.

The main risk of being public is to employee morale, but the right internal
culture/messaging, and (occasionally) option-repricing/reissuing can manage
that.

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zeroonetwothree
Most FB employees have RSUs, not options.

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ruggeri
Where was the content here? What was the point of this article? It's a bunch
of cobbled together nonsense with no logical flow.

Pardon someone grumpy to be up early on a Saturday, but please don't post
things that make no damn sense.

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angersock
It my be just me, but did anyone else sense a lot of Wall Street/banker/etc.
"Heh, look at those adorable little web people, trying to _do_ something?"

To wit: Start-up entrepreneurs cannot evade the discipline of the capital
markets any more than can the prime ministers of Spain and Italy.

Honestly? Isn't that a bit self-congratulatory? How about places like Barclays
--can they evade the discipline?

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temphn

      The roadblocks he faced in building the world’s biggest 
      social-networking company were tiny
    

Nathan Vardi is just completely ignorant. I'm surprised to see something so
colossally stupid in Forbes. Say what you will about them, Zuckerberg fended
off dozens of competitors (ranging from Myspace to Apple's Ping to now Google
itself) to rise to world dominance. Facebook didn't just "happen".

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sadga
I don't know why you are surprised. Forbes is not a reputable publication.
It's "People Magazine / US Weekly" for people in the business world. It's not
Bloomberg News.

[http://www.hnsearch.com/search#request/submissions&q=for...](http://www.hnsearch.com/search#request/submissions&q=forbes&sortby=create_ts+desc)

