Facebook Case
Facebook, Inc. in Transition
Introduction: It has been almost one year since Mark Zuckerberg decided to take his social media site public. Created on the dream of making the world more open and connected, Mark has devoted the past ten years to making that dream come true. Starting while still in college with a product called Facemash, Mark saw the potential for connecting people through the internet. He has devoted his entire adult life to Facebook which took six years to become profitable. Facebook quickly overtook competitors such as MySpace and became the social square of a global village. The user numbers grew exponentially and soon outnumbered the populations of many countries. The resulting global village was seen as ripe for advertising, profiteering, and soap-boxing. Through the growth, Mark was able to maintain and spread a sense of information democracy. All voices and opinions had equal pull and could reach audiences previously inaccessible. Formerly repressed people had an accessible outlet to outsiders. The simultaneous development of the smartphone industry provided portable and affordable platforms for Facebook everywhere. But what is all of this social capital worth? In 2011 an investor purchased a 1% stake in Facebook for $500 Million, which set Facebook’s net worth at $50 Billion. A year later when deciding to take the company public, Facebook negotiated an IPO price of $38 per share for a total company value of $104 Billion dollars. Many were skeptical that a social media company with few physical assets and no physical products was actually worth over $100 Billion. In fact, Facebook’s IPO was the highest initial value of any newly offered company. Mark himself was uneasy and not openly supportive of the jump to IPO. It was not a strategic business decision but rather a necessity based on the SEC’s rules (Facebook, Inc, 2013). Investors and users alike wondered how Facebook would
Introduction: It has been almost one year since Mark Zuckerberg decided to take his social media site public. Created on the dream of making the world more open and connected, Mark has devoted the past ten years to making that dream come true. Starting while still in college with a product called Facemash, Mark saw the potential for connecting people through the internet. He has devoted his entire adult life to Facebook which took six years to become profitable. Facebook quickly overtook competitors such as MySpace and became the social square of a global village. The user numbers grew exponentially and soon outnumbered the populations of many countries. The resulting global village was seen as ripe for advertising, profiteering, and soap-boxing. Through the growth, Mark was able to maintain and spread a sense of information democracy. All voices and opinions had equal pull and could reach audiences previously inaccessible. Formerly repressed people had an accessible outlet to outsiders. The simultaneous development of the smartphone industry provided portable and affordable platforms for Facebook everywhere. But what is all of this social capital worth? In 2011 an investor purchased a 1% stake in Facebook for $500 Million, which set Facebook’s net worth at $50 Billion. A year later when deciding to take the company public, Facebook negotiated an IPO price of $38 per share for a total company value of $104 Billion dollars. Many were skeptical that a social media company with few physical assets and no physical products was actually worth over $100 Billion. In fact, Facebook’s IPO was the highest initial value of any newly offered company. Mark himself was uneasy and not openly supportive of the jump to IPO. It was not a strategic business decision but rather a necessity based on the SEC’s rules (Facebook, Inc, 2013). Investors and users alike wondered how Facebook would