Facebook recently filed an S-1 with the SEC to finally go public. Their IPO is one of the most anticipated public offerings in history. The filings show that they have extraordinary growth and are already very profitable. This is a very hard thing to do. (I will be talking about how FB’s IPO was so different from Zynga’s in a later post.)
FB’s financial disclosures were awesome. They provided great charts and statistics that helped substantiate their filing. Kudos to FB. However, the most interesting piece in the whole filing was Zuck’s letter to potential investors. This letter laid out Zuck’s views regarding FB’s roots, where FB is today, and where he believes FB is going. You can check it out here.
He opens up by saying, “Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.” He goes on to explain how this “connectedness” is a good thing. And I agree (for the most part).
He later goes on to give his take on “money’s” role in accomplishing this goal… “Simply put: we don’t build services to make money; we make money to build better services.”
He later goes on to explain the “The Hacker Way” and about staying relevant in the social network. I first thought, “this sounds pretty awesome! It sounds like he genuinely cares about the “product” and about the goal of connecting people, not money! What a great guy!”
But wait a second… I am getting a fit of déjà vu. Rewind to 2004. There was a giant technology IPO who also filed a wonderful prospectus (S-1). In the filing, they stated:
DON’T BE EVIL
Don’t be evil. We believe strongly that in the long term, we will be better served-as shareholders and in all other ways-by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.
Google users trust our systems to help them with important decisions: medical, financial and many others. Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating. We also display advertising, which we work hard to make relevant, and we label it clearly. This is similar to a well-run newspaper, where the advertisements are clear and the articles are not influenced by the advertisers’ payments. We believe it is important for everyone to have access to the best information and research, not only to the information people pay for you to see.
Google’s Founders’ Letter goes on to discuss their other goals as well (the very next section following the above passage is titled “Making the World a Better Place”). Fast forward to 2012. Google has recently come under fire (and rightly so) for compromising these principles by sacrificing objectivity in favor of pushing their own products and in turn revenue and profitability. They have come a long way since 2004… But at what cost?
Money does weird things to people (and companies). History has shown us that much. Zuck will be a multi billionaire once FB goes public (he’ll owe over $1B in taxes!). Despite all this, he has proven to be dedicated to fulfilling the “social mission”. I hope they continue to do great things. But it does not mean I am not weary of the effects this filing could have on the company.
So all in all, my message/challenge to FB. I hope you can look back to your filing 8-10 years from now and honestly say you have upheld the beliefs in your original filings. I have no doubt that if you do, you will continue to be a successful and profitable company.
What are your thoughts/opinions regarding FB’s letter to investors? Is it too much “pie in the sky”? Do you think they only view money as a means to an ends?