Facebook’s IPO and the rise of the Social economy
Who knows if Facebook will still be around when you are grown. My guess is it will be. The company went public in an IPO earlier this year, and there’s been a firestorm of coverage. The main story of the IPO has been how “botched” it supposedly was – for several reasons:
- Rumors swirl that certain large investors were allegedly tipped by the company or at least by the underwriters that Facebook was cutting it’s revenue projections, but this information wasn’t shared with everyone publicly. This is called selective disclosure, and it’s spectacularly illegal if that’s what happened. Morgan Stanley was the lead underwriter on the IPO, and the whole thing has given their very prestigious name a huge black eye.
- The stock price dropped significantly after the IPO in initial trading, which is good for the company in their initial fundraising efforts but bad for investors who bought in and saw their investment plummet. The stock has been a flop so far considering initial expectations. This has given FB a bit of a black eye with initial investors.
- Nasdaq, the exchange where FB was listed, had some technical difficulties during early trading that added to the confusion and frustration for initial investors. Landing the Facebook IPO (instead of it going to the NYSE) was considered a coup for Nasdaq. Appearing to have screwed it up – not so much. Another black eye, this time for Nasdaq.
None of this ultimately means much in the grand scheme of things. Some rules may have been broken, some people may wind up going to jail, but the main story is Facebook is now a publicly traded company now valued around $60B.
In the late 90s, early 2000s, when Mommy and Daddy were still in college, we experienced what was called the “dot com bubble” bursting. Technology advancements fueled by the growth of the Internet and eCommerce gave rise to massive speculation in the stock market where companies were going public with no real business model or revenue stream. It was “irrational exuberance” as former Fed Chairman Alan Greenspan would later describe it.
Facebook’s IPO and the underwhelming story it has been so far has given rise to speculation that we’re seeing another tech bubble around social. I don’t think think this is true. I suspect that when you’re older, however botched the IPO may have been, Facebook’s ascension will punctuate the rise of the Social economy. The Internet economy gave us eCommerce and Amazon.com and massively disrupted retailing and manufacturing, creating a more global and interconnected economy across companies. The Social economy is creating a more global and interconnected economy among individuals. We’re still experiencing that change right now and cannot yet see all the ultimate ramifications it will have on us as individuals and collectively on society or in our economy.
I can’t imagine what the evolution of Internet and Social trends and technologies will mean for you when you are grown up. The space is evolving rapidly. I will say this… Much has been written about how as social technologies have been rising in adoption, many speculate that this new digital connectedness is making us feel more isolated and lonely in the real world. Here is one long but interesting article that does a nice job of explaining this phenomenon.
My hope for you, my children, is that however prominent the rise of the Social economy becomes and whatever other ripple effects or next waves of evolution bring the world that you’re growing up in, please try to remember the value of real human interaction in the real world. Remember to call your friends and hear their voice over the phone, not just read their words on their FB wall or a txt message. Even better, go visit them in person. Meet for lunch and look your friends in the eye. Hear their laughter in person – it’s much more fulfilling than a trite “lol.” The world outside is still the real world. Life and love is about the quality of your interactions with the people you care most about, not the quantity.