Is taking your company public overrated? It depends. If your company’s business model is based around a fad, I might say yes. The questions you need to ask before taking your company public include: do you want your company to be under the microscope in the media? Do you want your employees to focus on the stock price instead of their job requirements? Are you ready to move from an energetic start-up to a policy-driven bureaucracy? Is the timing right? In other words, is the market and economy favorable? Is the market in bull or bear state? Personally for a social networking company I might stand on the side of keeping it private for several reasons.

Chat Rooms
When the Internet first went mainstream in the 1990s, anonymity was the name of the game. Remember all the chat rooms and bulletin boards? Internet Relay Chat or IRC is still around but caters to more of a niche market now but generally speaking everyone chose and operated under an anonymous handle. So what happened? Why did everyone suddenly decide in the 2000s that it would be a good idea to come out of hiding and use real names?

Well maybe it wasn’t such a good idea after all. Now we could all be found. This meant that people from our past specifically old high school friends, exes, long lost relatives came out of hiding and suddenly wanted to form relationships on social networks. At first this was a welcome intrusion into our lives as we reconnected with people from our past but as time wore on this fad of reconnecting became a little stale. This might have occurred as people are generally happy with people in their lives and really just have limited room for relationships. Maybe we all just long for the days of anonymity and cryptic handle names.

Business Networking vs. Personal Networking
Networks like LinkedIn have succeeded because business networking means money. Making the right connections and partnerships can mean business success. Finding the right employees can mean no more headaches and increased productivity. Social networks like Facebook on the other hand are more laid-back. Here it’s more about sharing pictures of the kids, videos, opinions, jokes, inspirational messages and quotes. Many people crowdsource looking for multiple opinions. Can you make money off such a model? People aren’t on Facebook to shop and spend money – they’re on the site to chat, mingle, and unwind. Period.

On another note, social gaming is big business and buying up virtual farmland or virtual clothing for our avatars is desirable by many. However, that being said, social gaming is making its way outside of Facebook and embedding into other social networks as well which are becoming more numerous. Last week Microsoft soft-launched its own network called www.so.cl albeit without gaming in this beta release but chances are it will show up eventually. Google+ has already made inroads into the social gaming territory and has heated up competition.

Business Policy
In the start-up world it’s like the wild wild west. All your employees are shooting from the hip and you’re all learning as you go. It’s an exciting place to be and the anticipation of success is always in the foreground. Now fast forward to post-IPO corporate life and you’ll see a much different organization. The company is becoming more bureaucratically driven as policies are created and refined while middle managers compete for resources. Innovative ideas are stifled by middle managers who think they know what’s best for the company. There’s nothing new under the sun. This has happened to every company making the jump to public and will also happen to Facebook.

Share Price
When a company finally goes public the focus of the employees changes from being customer/user driven to share price driven. The water cooler chatter has changed from current events and gossip to talk about the share price and the company’s well being. Employees now keep their eyes on stock tickers and browser alerts displaying the latest share prices, fueling anxiety over performance. Employees are now daydreaming about what they can buy with their new found fortunes. The focus has changed and so has the culture.

Stock Market
What about the timing? Was it a smart move for Facebook to IPO in May 2012? Personally I’m thinking that with the Global Economy still teetering on the brink of recession and the Euro-zone issues with Greece, Spain etc that the timing was completely off. Investors are not in the same mindset as they were during 1999 dot com buying frenzy. People are a lot more cautious about throwing their money into the markets these days. There was really no rush for Facebook to go public. They were doing just fine as a private company and really should have considered their business model more seriously before making the move.

So what now, is Facebook doomed? Most of the media reports would have you believe that but the reality is that shares in the company have been trading for just seven sessions. In the life of a company seven days is dust blowing in a breeze. Sure Zuckerberg’s net worth has gone down from $19 billion to $14 billion but in the end he’s still a billionaire and they still have 800 million users.

Jay Kenobi

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