Today has been a good day for Mark Zuckerberg. But I imagine everyday is a good day for Mark Zuckerberg. Imagine being him, imagine it for a second. Stop reading this and just think. You wake up next to your beautiful girlfriend, eat a bowl of cereal (probably Golden Nuggets) and head off to work. When you get to your HQ in Menlo Park, California, you sit at your desk for a bit, poke a few people then head off for a meeting. You walk into the board room and you notice everyone is looking at you a bit funny, presumably because you are still in your pyjamas. Yet no one stops the meeting, they just carry on and trot some numbers. They just do not care, because "you are the CEO bitch!"
That is a normal day for Zuckerberg. So imagine the bounce in his step today, as Facebook went through its IPO (initial public offering). An IPO is when a private company goes public, creating shares and selling them on the stock market, so anyone can own a bit of Facebook. Today those 421 million shares were valued at $34 to $38 each, giving Facebook a total value of $104 billion dollars. To put that into perspective, Facebook is now the highest valued company at the time of its IPO in U.S. history, beating Google and Amazon. But it could be somewhat of a poisoned chalice for the company, because there are now astronomically high expectations of Facebook to make big returns for its shareholders.
For Facebook to be a successful public company, it must achieve three things. First of all, it must conquer China. Not by raising an army of similarly under-dressed Zuckerberg clones and marching into Beijing (although looking at its vast audience, it probably could). At the moment, China has nearly 500 million internet users and Facebook has a 0% share of that bulk. Facebook needs China, but it is a notoriously hard market to crack and some experts have said that the longer Facebook takes to enter China, the less successful it will be in terms of revenue.
The second is to increase revenue. The historical valuation of the company is going to put a lot of pressure on them to produce results, especially from its advertisers. Advertising is a main source of income for Facebook, and yet they are not doing that well. This is why: I assume you reading this has a Facebook. If so, be brutally honest and think how many times you click the links at the side of the page, telling you to visit so-and-so. No, I don't either. That is why Facebook makes just $5 a year off of each user and for a website with 900 million users, $5 is feeble. It needs to increase its revenue tenfold if it is to live up to expectations.
The third and final point is perhaps the most difficult: stay relevant. When I first dipped my toes into the somewhat tepid water of social networking, everyone was using a site called Piczo. Within a few years, everyone had upped sticks and moved to Bebo. Then it was MySpace and now it is Facebook and/or Twitter. This is the 104 billion dollar question: is Facebook a fad? Or will it stay forever? I am not even going to guess. Facebook is trying its hardest to stay fresh and engaging for its users, but it seems like the now cool thing to hate Facebook. Timeline, for example, is universally-panned for being a useless eyesore that reminds me of a "for sale" board in the window of the local newsagents.
Facebook has the potential to be a truly-historical company, a symbol of the Web 2.0 movement and a genuine rags-to-riches story. It must keep its momentum going though and that is perhaps easier said than done.
That is a normal day for Zuckerberg. So imagine the bounce in his step today, as Facebook went through its IPO (initial public offering). An IPO is when a private company goes public, creating shares and selling them on the stock market, so anyone can own a bit of Facebook. Today those 421 million shares were valued at $34 to $38 each, giving Facebook a total value of $104 billion dollars. To put that into perspective, Facebook is now the highest valued company at the time of its IPO in U.S. history, beating Google and Amazon. But it could be somewhat of a poisoned chalice for the company, because there are now astronomically high expectations of Facebook to make big returns for its shareholders.
For Facebook to be a successful public company, it must achieve three things. First of all, it must conquer China. Not by raising an army of similarly under-dressed Zuckerberg clones and marching into Beijing (although looking at its vast audience, it probably could). At the moment, China has nearly 500 million internet users and Facebook has a 0% share of that bulk. Facebook needs China, but it is a notoriously hard market to crack and some experts have said that the longer Facebook takes to enter China, the less successful it will be in terms of revenue.
The second is to increase revenue. The historical valuation of the company is going to put a lot of pressure on them to produce results, especially from its advertisers. Advertising is a main source of income for Facebook, and yet they are not doing that well. This is why: I assume you reading this has a Facebook. If so, be brutally honest and think how many times you click the links at the side of the page, telling you to visit so-and-so. No, I don't either. That is why Facebook makes just $5 a year off of each user and for a website with 900 million users, $5 is feeble. It needs to increase its revenue tenfold if it is to live up to expectations.
The third and final point is perhaps the most difficult: stay relevant. When I first dipped my toes into the somewhat tepid water of social networking, everyone was using a site called Piczo. Within a few years, everyone had upped sticks and moved to Bebo. Then it was MySpace and now it is Facebook and/or Twitter. This is the 104 billion dollar question: is Facebook a fad? Or will it stay forever? I am not even going to guess. Facebook is trying its hardest to stay fresh and engaging for its users, but it seems like the now cool thing to hate Facebook. Timeline, for example, is universally-panned for being a useless eyesore that reminds me of a "for sale" board in the window of the local newsagents.
Facebook has the potential to be a truly-historical company, a symbol of the Web 2.0 movement and a genuine rags-to-riches story. It must keep its momentum going though and that is perhaps easier said than done.
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