"You have received a shareholder request from Mark Zuckerberg. Confirm or Ignore?"
The talk of the town last week was the Facebook initial public offering (IPO). Well, actually it was the filing of the paperwork for the IPO that will take place a few months from now. But between now and then, you'll be hearing a lot more about it.
No doubt your friends will be sharing links about it, polls will be asking if you want to become an investor, and there will be some pretty divided opinions. But there is some speculation that Mr. Zuckerberg, whose company helped redefine social interaction, might try to redefine the IPO process. Or maybe kick-start an idea that has never really taken off: offering a piece of the action directly to users. (Note: The IPO is only available in the United States, but once shares starts trading on the open market, Canadians will be able to buy and sell the stock.)
Bob Pisani, a reporter with CNBC, notes in his blog that Boston Beer offered shares of their IPO to customers in 1995 by including subscription coupons in six-packs of beer. Fill out the coupon, get some stock at the IPO price. It was wildly successful as they had to turn away two out of every three people who wanted in.
Fast-forward 17 years where many people bank and invest online routinely; offering users a slice of the pie directly is no longer a stretch of anyone's imagination. Besides, with Google+ (a competing social network) recently reaching 100 million users, investors would have a reason to stick with the incumbent and become great(er) ambassadors of the brand. They would have a vested interest in promoting Facebook over Google+ or any other future competitors.
But by that logic, investors who were also users would have to balance the right for privacy with a desire for profitability. And since Facebook makes a lot of money by knowing as much as it can about you and monetizing that through selling targeted ads, in addition to taking a cut from third-party applications (think Farmville and Zynga), as an investor you would applaud attempts to extract more information and money out of yourself and your friends.
As a user, however, you may be less than thrilled. Any long-time Facebook user has seen the rants about ever-changing privacy guidelines and policies. If you shared those notes or links on your timeline in the past, would you continue to do so if you were an investor? The tones are anti-Facebook, but apparently not anti-Facebook enough to get people to cancel their accounts.
If you forego owning the stock, do you think you would want to know if any of your friends were investors? Would that change how you view their opinions on privacy issues or invitations to get bitten by zombie mob lords?
Imagine your children charging you to access pictures of your grandchildren.
Okay, I got a bit carried away with that last line.
But while I don't think mixing business with pleasure is going to turn Facebook into the anti-social network, it certainly changes things. Everyone's relationship status could simultaneously change to "It's complicated."
Preet Banerjee, B.Sc, FMA, DMS, FCSI, is a W Network Money Expert, and blogs at wheredoesallmymoneygo.com. You can also follow him on twitter at @PreetBanerjee
What are Facebook's owners worth?
Based on a leaked Goldman Sachs document from last year showing the percentage of ownership, and a possible $100-billion (U.S.) value on Facebook, this is a partial list of who owns Facebook and what their stake might be worth:
CEO Mark Zuckerberg: $24-billion
Eduardo Saverin, one of the four co-founders: $5-billion
Sean Parker (the Napster founder, played by Justin Timberlake in The Social Network): $4-billion
Bono (U2's front man): $1.5-billion
Venture capitalists, hedge funds and other investment firms: $26.5-billion
Facebook employees: $30-billion
Other: $9-billion
Sources: Learnvest, Gizmodo
Preet Banerjee