The Folly of a FB IPO a Personal Perspective

I remember clearly when FB released as a college only social media effort, out of Harvard. One had to be on campus, with a college email address to be included. Early attempts were fruitless, as there was a firewall that was solid. Ultimately, that all changed when FB opened the doors to the whole world, circa 2005 or so. The growth of those who wished for some Face time grew dramatically.

Now as to the current IPO. I have extensive connections in investment world, from a gig with Y2K in 1998 through 2001, and most of them have asked me if there is value here. Well let’s look at it from a strictly numbers aspect, shall we?

A. 850 Million claimed ACTIVE accounts. My problem with this number. It’s purely UnAudited, which is like a newspaper claiming circulation without a 3rd party review. Hmmmmmmm..

B. I travel overseas quite a bit, and most FB mobile folks are outside US. And, FB mobile has ZERO advertising, since platform is controlled by others. So, where’s the beef on the growth of advertising if 2/3 of upside on ads, is not available easily. hmmmmmmmm

C. The initial folks that bankrolled this data mining operation, want their money back, and a public IPO is one way to do it. Once the investors find out that the numbers are an illusion, well, then…hmmmmmm

D. What would you say if you found out that data mining is the single most prominent growth market for social networks, and is centered in the Seattle area, where and MSoft both operate. The marketing world is always trying to pre figure out what folks will do, and this data set is worth a literal fortune. IPO can make some hay with the data center needs that arise from data mining.

E. Control of company resides in one, young, and impressionable person. Never a good sign.

F. The asia, european, and South American markets are the key to internet expansion, and all of them are ready to restrict FB access due to the apparent lack of interest in preserving the culture of personal privacy from the top.

So, my own look at IPO. Having seen some incredible IPO’s in past, go sour, my prediction is that once the due diligence folks figure out how hollow the upside growth numbers really are, this one might set a new record for rise and fall of valuation and make FB a prime ‘acquisition’ target for a strong software concern.

My three cents on this issue.

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