The Facebook IPO: A social movement going public.

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There is a lot of hype about Facebook floating the stockmarket. The power of sheer numbers is overwhelming. Facebook has about 500 million users and will be valued at a minimum of US$10 per user or US$ 50 billion, but most likely two or three times more. Mark Zuckerberg, Facebook’s Chief Executive Officer (CEO), will jump into the top tier of the FORBES rankings as one of the youngest most wealthy individuals on earth, reaching this position much faster than for example Bill Gates. The stock may revive many dreams of the internet industry which busted with the dot-com bubble, now over a decade ago.
However, Facebook is not a company going public but a social movement having transformed itself into a company; despite being listed on the stock exchanges it wants to stay this way. This is the credo of the remarkable letter by CEO Mark Zuckerberg to future stock holders, which is part of the floating registration document registered with the US Security and Exchange Commission. “Facebook was not originally created to be a company. It was built to accomplish a social mission (…)” reads his first sentence.
Essentially Zuckerberg addresses three central targets Facebook wants to achieve, (1) to strengthen the way people relate to each other, (2) to improve the relationship between people and businesses and the economy, and (3) to change the way people relate to their governments and social institutions. Facebook does not go public for the money, which is seen as a means, not as an end. Zuckerberg writes “Simply put, we don't build services to make money; we make money to build better services.” In the remainder of his letter Zuckerberg describes how Facebook wants to act, namely by implementing innovative approaches, “the Hacker Way”, with a focus on impact in a bold, fast and open manner reflecting the social value of its products.
The letter is truly remarkable because it clarifies the vision of the company together with its basic philosophy in a way rarely found in business documents. In fact, Zuckerberg’s letter will most likely figure prominently in many textbooks to come on corporate visions, values and strategies in the 21st century. Even the culture is paraphrased by describing how staff meets at regular “hackathons” for rapid prototyping and exchanging ideas. All new employees have to visit a “boot camp” to get ready for a culture in which “code wins arguments” and “done is better than perfect”.
The Initial Public Offering (IPO) of Facebook will certainly not fail and whether or not the company’s performance lives up to the high expectations remains to be seen. Part of its success will depend on the answer to the question of if Facebook does indeed qualify as a social movement. If one reads Mark Zuckerberg ‘s writing about the importance of profits without being obsessed by profit maximizing, one is reminded of the origin of public companies. Citizens invested together to build public utilities like bridges which would serve all and should be reasonably priced to make that public use possible. Like Apple and Google, Facebook wants to become part of the “empire of the good”, companies which pay their staff and investors well but primarily offer a social service. The investors of Facebook, however, will be the “usual suspects” which have a legitimate interest in profit maximization. In addition and in contrast to Apple and Google, Facebook has only one commodity to offer, user access and data. Clients might be interested by gathering even more data using this platform. It will not be easy to harmonize these conflicting interests.
Due to the nature of the product Facebook sells as a social movement it already has some quite ambivalent members . Many observers, often from the older generations, are astonished how much information their children are willing to share on the internet and nearly everywhere in the world advocates of privacy complain about the way Facebook and Google collect data. The young may be more outgoing, however also a significant minority of the younger users worry about the collection and treatment of their data. To speak of a “love hate” relationship between developers and users may be overdone, but the mandatory “timeline” raised awareness of the vast amount of data collected. What started quite harmlessly ten years ago as “targeted advertising” based on anonymous isolated keywords has given way to elaborated profiling in which users are tracked close to continuously. Facebook users are only as anonymous as the company can and will protect them. The “like button” from Facebook was a major instrument not only to connect people but also to enable tracking over separate websites.
With this background the relationship between individuals, businesses and the government or social institutions form no magic triangle but a stressed field. The better businesses can reach out to customers by using their data, the higher is the probability that customers will regard this relationship as a bit too close. Also governments do not embrace Facebook; on the contrary, several governmental institutions all over the world have independently voiced concerns,
Zuckerberg writes a lot about “great new services” in general and an IPO file is certainly not the place for specific product announcements, but recent presentations did not convince everybody. As indicated, the “timeline” as a mandatory automatic history of posts and pictures was welcomed with skepticism. As handy as such a digital life history may be for some, it reminds the entire community of the cumulating amount and the nature of data kept.
Independent of the data treatment problem is the international spread of the movement. Up to date Facebook has concentrated on the markets of the western hemisphere and been so successful that in its current form it could be close to the point of saturation. If the Asian and other unchartered markets will follow is an open question. Other social networks and internet companies had to note that regional competition can be tough and it needs more than enough funds for acquisitions to enter foreign cultures. Google had to learn in China that compromises may be necessary - and whenever there is a compromise there are people alienated by it.
Mark Zuckerberg has to be seen as a controversial person. He is an object of envy demonstrating how far you can get with a good simple idea but also reminding most people that they obviously don’t have it. Was Facebook just his lucky strike? The success of Facebook will depend on getting away from advertisements as the major source of revenue and becoming truly international. Zuckerberg stresses the need for “great new services” himself. Such services have the tendency to be paid for after some time and may be a less problematic operating base for the future.