Inder's Internet Blog

Marian Toole

Boy, was there was a lot to digest from yesterday's Facebook IPO filing.

The filing was a symphony of financial figures, charts, stats, highlighting and discussing strategy, risks, and growth expectations. So to make it easier for you, CNET has compiled the top 10 surprises and things you need to know about Facebook.

1. Facebook is big: Okay, that's a pretty obvious one. But it's jaw-dropping to see just how big it really is. The company reported 845 million monthly users, rapidly closing in on 1 billion. Keep in mind most people will have that 500 million figure in their heads courtesy of the film "Social Network." Impressively, more than half of that figure log in to Facebook daily. No other company has this kind of deep and broad relationship with their end users.

Other impressive stats include 2.7 billion likes and comments and 250 million photos uploaded each day, and 100 billion friendships.

2. When it comes to revenue, Facebook is just getting started: Despite a massive user base, Facebook hasn't quite figured out how to take advantage of that to generate revenue. Financially, the company is on sure footing with solid growth. But given its audience, revenue should be higher. Once--or if--Facebook figures out how to generate more revenue through its display ads and its app platform, it may actually live up to its purported $100 billion valuation.

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3. It's hooked on Zynga: The common wisdom was Zynga was reliant on Facebook for its existence. Well, it maybe a two-way street, as the social network derives 12 percent of its total revenue from the cut it gets from Zynga's social games, including Farmville and Words With Friends.

Zynga is important enough to Facebook that it was listed as a risk in Facebook's filing. Any disruption to its relationship with Zynga could significantly hurt its revenue.

4. Google is seen as its biggest threat: This may not be a complete surprise, but the filing directly acknowledges the uphill battle it faces against Google. While Facebook called out Microsoft and Twitter as competitors too, but it specifically mentioned Google as the example when expressing its concern about companies with more resources and superior competitive position.

While this isn't likely to happen, Facebook listed as a potential threat Google using its search engines, browsers, and mobile platform to deny access or make it difficult to get to Facebook's sites and services. Or it could just promote its own Google+ network over Facebook.

5. Mobile needs to be a priority: Facebook has always lagged behind in the development of its mobile app, and you're beginning to see why. The company acknowledged that it doesn't derive any revenue from its smartphone app--a big problem if more people each day are checking in through their iPhone or Android smartphone. In fact, the company boasted more than 425 million mobile monthly active users in December.

Facebook's problem is that unlike the website, it doesn't deliver ads to the app. The revelation underscores the dilemma that companies face with these apps: just how do you place ads in them without irking your users? Facebook said it is investing heavily in mobile, as that's where everything is going. But they're going to need to do something quickly, because Apple and Google have already established their own presence in mobile ads.

6. Revenue growth is actually slowing: The company's revenue grew an impressive 88 percent to $3.7 billion in 2011. Its growth from 2009 to 2010: a phenomenal 154 percent. Yes, most companies would kill for this kind of growth, but many of those companies are already public and already in a much more mature state, while Facebook isn't public yet.

Wall Street is banking that Facebook figures out the proper business model and re-accelerates the revenue growth.

7. It does pay to be on Facebook's platform: Developers received $1.4 billion from transactions enabled by Facebook's payment infrastructure. While many may look at the company's advertising potential, a surprisingly large chunk of revenue came from its platform.

Still, that pales in comparison to Apple's iOS platform, which paid out $700 million to developers in the last quarter, and $4 billion over the lifetime of the App Store. Of course, Facebook got started more recently.

8. Facebook isn't so hot in Asia: Facebook may have global reach, but it is still lacking in the key growth markets in Asia. Facebook did list out a number of local social networks and Web portals as competitors, and looking at the financials, it's clear the company has a lot of work to do to expand its presence around the world.

A majority of its revenue still comes domestically. Last year, 56 percent of its revenue came from the U.S., although that was down from 62 percent in 2010. Outside of the U.S., the company said most of its revenue comes from Western Europe, Canada, and Australia.

9. Facebook IPO funds will spur innovation: Just like Google spawned a wave of millionaires who pursued their own projects, the Facebook billions will serve as a foundation for several start-ups. You're already seeing it, with Dustin Moskovitz's Asana start-up, as well as Dave Morin's Path social photo-sharing app.

10. Mark Zuckerberg has an entourage: The safety of the CEO is always important, but given Zuckerberg's bigger-than-usual control over Facebook, it seems extra critical to keep the 27-year-old out of harm's way. Hence, the CEO who favors hoodies, will have a "comprehensive security program...to address safety concerns resulting from his position as founder, chairman, and CEO."

For example, Facebook has outfitted his modest home in Palo Alto, California. "We paid for the initial procurement, installation and maintenance of security measures," although the S-1 doesn't disclose how much that cost. In addition, Facebook is paying annual costs of security personnel for Zuckerberg. Naturally, he'll also get use of a private jet.

Article Source: http://news.cnet.com/8301-1023_3-57370574-93/facebooks-ipo-filing-top-10-surprises/

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Marian Toole

NEW YORK — Facebook founder Mark Zuckerberg turns up at business conventions in a hoodie. “Cocky” is the word used to describe him most often, after “billionaire.” He was Time’s person of the year at 26.

So when he takes Facebook public, why would he follow the Wall Street rules?

The company is expected to file as early as Wednesday to sell stock on the open market in what will be the most talked-about initial public offering since Google in 2004, maybe since the go-go 1990s.

Around the nation, regular investors and IPO watchers are anticipating some kind of twist — perhaps a provision for the 800 million users of Facebook, a company that promotes itself as all about personal connections, to get in on the action.

“Pandemonium is what I expect in terms of demand for this stock,” says Scott Sweet, senior managing partner at IPO Boutique, an advisory firm. “I don’t think Wall Street would want to anger Facebook users.”

The most successful young technology companies have a history of doing things differently. Google’s IPO prospectus contained a letter from its founders to investors that said the company believed in the motto “Don’t be evil.”

Facebook declined to comment, but Reena Aggarwal, a finance professor who has studied IPOs at Georgetown University’s McDonough School of Business, believes Zuckerberg will emulate Google’s philosophy, at least in principle.

Founders Larry Page and Sergey Brin wanted an IPO accessible to all investors, and said so in their first regulatory filing. Facebook may say something similar when it files to declare its intention to sell stock publicly.

Facebook is expected to raise as much as $10 billion, which will value the company at $75 billion to $100 billion, making it one of the largest IPOs. A stock usually starts trading three to four months after the filing.

The highly anticipated filing will reveal how much Facebook intends to raise from the stock market, what it plans to do with the money and details on its own financial performance and future growth prospects.

Along with Wall Street investment banks, Google used a Dutch auction, named for a means of selling flowers in Holland, to sell its shares. It took private bids and allowed investors to say how many shares they wanted and what they were willing to pay.

The process wasn’t smooth, though, and Google had to slash its expected offer price at the last minute. If you bought at the IPO, for roughly $85 a share, you still did well: Google closed Tuesday at $580.

More recently, when it filed for an IPO last June, Groupon, which emails daily deals on products and services to its members, added a letter from its 30-year-old founder, Andrew Mason.

“We are unusual and we like it that way,” the letter said. “We want the time people spend with Groupon to be memorable. Life is too short to be a boring company.”

It’s almost become conventional for tech companies to include an unconventional letter when they make their stock market debut. It’s widely expected that Zuckerberg, in the very least measure of showmanship, will write one.

Article Source: http://www.washingtonpost.com/national/as-facebook-prepares-to-go-public-investors-wonder-whether-zuckerberg-has-a-twist-in-store/2012/01/31/gIQADXUrfQ_story.html?tid=pm_national_pop

Marian Toole

Facebook announced Tuesday that it will be introducing a handful of privacy changes to their 750 million users. AllthingsD reports that the new privacy features will go into effect on August 25, initially to only one percent of all Facebook users.

xactly how much the new settings are a response to longstanding user criticism or new competition in the form of Google+ is hard to discern. It does seem clear however, that without the new threat to Facebook, the company would have had little incentive to change its historically lax approach to user privacy.

The implications for businesses trying to connect on the platform are huge, as users now have a slew of new tools to control who sees what. Here is a breakdown of the changes:

1. You’ll have a drop-down menu on the upper right hand side of your Facebook page where you can choose to display things like your hometown or latest photo album. All of these options had been accessible previously on your Settings page, but this makes it much easier and clearer to control.

2. You'll be able to tag non-friends or pages in pictures and statuses. This is one of the few potentially advantageous new features for businesses. For example, your company can be tagged by users who want to mention it but who haven’t taken the time to officially “Like” it. Plus, tags now must be approved by users (see below).

3. Facebook will give you the option to verify or deny tagged photos of yourself. When you deny a tag, you'll have a several options. You can automatically remove the tag, request the photo be taken down, or block the user who tagged you.

4. Before you post a status update or picture, you'll be able to adjust exactly who sees it by selecting from Public, Friends or Custom options. Facebook is shifting to the term “public” instead of “everyone.”

5. You'll be able to easily access the “View Profile As” button directly on your profile, whereas before it was hidden in Settings. This lets you see which parts of your profile are public or visible to your friends with just one click.

6. You'll be able to tag your location in any post. By contrast, before you only had the option to check into locations via Facebook mobile.

7. You'll be able to change who sees status updates directly when you post them.

Overall, some of these features have always been available under the Settings tab, but by localizing them next to the information in question, Facebook has shown it’s ready to take privacy a little more seriously.

The hard reality for businesses looking to connect with people via social media is that it’s only getting harder. That is, when users are given more controls over what they share and who they share it with, companies will have a harder time attracting attention. Of course, as Facebook shifts the way users protect and share their information, we may see changes on how they manage business profiles, as well.

Despite crowds of users flocking away from Facebook with the release of Google+, ComScore just reported that the company saw 162 million unique visitors in July, an 11 percent jump from the same period a year ago, when it had about 146 million such visits. Facebook is going strong but understands that it must react to Google+’s much more progressive privacy policies.

The entrance of Google+ signaled the first real competition to Facebook since the MySpace era. Previously, Facebook was more concerned with attracting business than scaring off users, because those users had nowhere to go. Facebook now understands that if they don’t offer the privacy options users have come to expect from the likes of Google+, it doesn’t matter how business-friendly it might be, because there will be no users left.

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Inder's Internet Blog

Thursday, February 2, 2012

Facebook's IPO filing: Top 10 surprises

Tuesday, January 31, 2012

As Facebook prepares to go public, investors wonder whether Zuckerberg has a twist in store

Wednesday, August 24, 2011

How Facebook’s New Privacy Settings Will Affect Your Business

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