Tomorrow, the world sees its largest tech IPO. Facebook will be debuting on the NASDAQ market for $38 a share, at an estimated $100 billion valuation. That’s 25 times annual sales! If Apple were valued the same, it would be worth three trillion dollars (its only valued at half a trillion)! Obviously there is a lot of optimistic expectation on how Facebook will perform in the coming years but is Facebook ready to face the scrutiny that comes with being a public company? Absolutely not. There are way too many unknowns variables in the Facebook equation:
1. Bad Ads
The Fix: Better ad solutions that leverage Facebook’s understanding of the user and their location. More ad options.
2. Slowing Growth
Facebook has had tremendous growth in the last seven years. Yahoo projected Facebook would have only 83 million users by the year 2015 when they offered Facebook $1 billion dollars in 2006. Some people thought Yahoo was crazy for offering that much, then later they thought Zuck was just plain nuts for turning it down. How we were all wrong. The last seven years has been great but it seems that Facebook has basically gotten everyone on Facebook that wants to be on Facebook. They’ve nearly saturated the market. This means that Facebook can no longer count on user growth to drive revenue, its only option is to optimize the value it gets from its current users. Easier said than done.
The Fix: Explore other planets for inteligent life. Get them on Facebook.
3. The King and His Empire
Its cute being 21, running a hot new startup in Cali, and hacking the night away with nothing more than beers to keep you going. Its dangerous to be in your 20’s, running a public company valued at $100 billion, and basically flat out admitting you don’t care about revenue. Its fine if you don’t want to make money, just don’t do it publicly! Investors are going to be complaining left and right about Facebook not taking the right approach in order to garner more revenue. Lucky for Zuck, he can give them the finger because he has 57% of the voting rights! He can basically dump Facebook down the toilet and take a big shit on it if he wanted to. It would put wannabes pouring bottles of Cristal on the floor to shame. “Oh you’re wasting that outrageously overpriced bottle of champagne? Fuck you, I just shitted all over a $100 billion dollar company.” But seriously, every move Zuck makes from now on will have an impact on the stock. Remember the whole controversy of Zuck wearing a hoodie to an investor meeting? Imagine that happened after Facebook went public. The stock would of taken a drop just because Zuck doesn’t know how to tie a tie. An investment in Facebook is an investment in Mark Zuckerberg. Lets just hope he doesn’t go crazy like Charlie Sheen.
The Fix: A crazy good PR team that makes Zuck look godly.