Will Facebook IPO change the soul of the company?
When Facebook becomes a publicly traded company, it will have a duty to its shareholders to maximize company profits. As it traverses from social media start-up to massive, publicly traded company, one media theorist says the company will have to battle to maintain its identity.
Facebook filed the first papers for it's Initial Public Offering Wednesday afternoon, just before the business day ended.
According to Bloomberg, Facebook has chosen Morgan Stanley to lead their IPO efforts, which are expected to generate $5 billion to $10 billion for the company and give the company a valuation of perhaps as much as $100 billion.
The IPO is expected to be one of the largest in U.S. history, certainly larger than Google and rivaling many of the largest on the global stage as well.
But the IPO will bring big changes for Facebook as well and will challenge the company to try and keep its own engineers and leaders from seeing this as the perfect time to cash in their stock shares and try to do something on their own.
Douglas Rushkoff, author of "Program or Be Programmed: Ten Commandments for a Digital Age," said the more money Facebook takes on, the more like money it will become. In other words, when a social media company is a social media upstart, it will have vastly different motives than the motives it has when it's responsible for acting in the best interest of its shareholder — a requirement for being a publicly traded company.
"The more public company you become on a stock exchange, the more really business-as-usual you become," Rushkoff said. "The more like corporate capitalism you become."
And, Rushkoff points, out that could mean some changes for Facebook users. Because profits for Facebook don't directly come from users — but rather from advertisers and social marketing firms — to maximize profits, Facebook will have to look for ways to improve that are in the best interest of advertisers and marketers.
"Rather than us, who are the people who are using this service for free, in exchange for surrendering our data," Rushkoff said.
To some extent, Google's IPO provides at least an indication of how Facebook will respond to becoming a publicly traded company, Rushkoff said.
"When Google became public, they had much more of an obligation to prove their devotion to their shareholders' interests," Rushkoff said. "They did that. They cut programs. They have to show earnings growth. They have to show focus. The got rid of Google Labs. You don't see Google talking so much about how every employee is going to have 20 percent of their time to do what they want."
In essence, Rushkoff said, the Facebook IPO isn't so much about social media taking over the economy, but rather about how the economy forces a tech start-up, a social media company, to adapt to the economy.
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