How will things change for Facebook after the IPO?
So, at last, Facebook has filed for its IPO, Initial Public Offering, basically meaning it’s now going to be publicly traded, so you could own a part of Facebook eventually. First, let’s take a look at some of the numbers.
Facebook is seeking to raise $5 billion through this IPO, but it may end up raising a lot more than that, according to many pundits. The company made $1 billion in profit on revenues of $3.7 billion in 2011, quite a feat. 85% of that came from advertising, and about 12% from Zynga, the social-gaming company best known for FarmVille.
Facebook has 843 million monthly active users, and about half that active on a daily basis. Perhaps more astonishing, more than 250 million photos are uploaded to the site every single day
Mark Zuckerberg, founder of Facebook, retains control over Facebook, with 28.4% of the stock, the percentage he holds right now, giving him a controlling interest with 56.9% of the votes. If, for example, Facebook would raise $10 billion with the IPO, Zuckerberg would then be worth almost $3 billion.
But he will go from a salary of $500,000 in 2011 to $1 in 2013, mimicking Steve Jobs, who famously took only $1 per year in salary after he returned to Apple in 1997.
Well, let’s not cry for Zuckerberg, okay?
The question then becomes, is this is the end of Facebook as we’ve come to know it or the beginning of something new?
My guess is, to borrow a phrase from Bachman Turner Overdrive, “You ain’t seen nothing yet.”
Already at almost 850 million users, Facebook is on track to reach 1 billion users sometime this year, probably sooner rather than later. That makes Facebook rank up there with as many users as population in the largest countries in the world, a truly remarkable achievement. I for one, do not see any slow down in Facebook usage among my family or friends, and not even professionally do I see anything like the Facebook apocalypse that some have predicted.
Sure, some people closed down their Facebook accounts in protest to lack in privacy and security, and other issues, but that was a small minority apparently, that never got any traction in wider circles.
And it’s inevitable, I assume, that what is successful will be criticized, no matter what it does, and that’s true for Facebook, as well. Now that it will be a publicly traded company, even though Zuckerberg apparently retains the control, it will have to be more careful about its moves. Now it has not only the users to satisfy, but the shareholders as well, and both parties can be fickle and turn on you in a second.
Other than tying up more people to use its services, where will Facebook’s necessary future growth come from? Online gaming with Zynga seems to be doing well, and there’s plenty of room for expansion there, in number of users as well as in revenue.
Will Facebook tackle Google head-on and go into search? Hardly likely. But online music, video, and other digital media, that could be matched rather nicely with the increasing user base. It also has a lot left to do in terms of apps and mobile, so expect that to be on Facebook’s radar too, moving forward.
But whatever it is that Facebook will do next, after the IPO, you’d be foolish to count Zuckerberg and co. out just yet.
Photo by Robert Scoble.