facebook IPO: What I would invest in if I was Zuckerberg

[Goran Askeljung]

facebook has now been around for 8 years and made a tremendous impact on how we perceive social connections and act upon them in our daily life. facebook is becoming ubiquitous and is changing the way we interact with others ever more. Now it is not socially accepted to not have a profile on fb if you’re of the younger generation.

In the upcoming fb IPO, the company hopes to raise at least $5b. This seems low and the IPO will probably be oversubscribed many times, making it hard for most people to get a piece of the action. Some experts put a valuation at $100b, so expect mayhem around the IPO.

Is a $100b valuation excessive? I don’t believe so, I think it’s too low, but that depends on what Zucki will do with the money. So far the company has not given anything away. Actually Mr Zuckerberg has said that fb can well do without it and finance any further developments of its services based on current revenue and cash flow.

A huge war chest of $100b, in my opinion would be best put to use to push the envelope of what the “social graph” implies to such heights’, that it will be impossible for others to follow in fb’s steps, to embed themselves so deeply in our lives, that we can’t get out of it.

What do I mean with that? Let me show you. AOL and Yahoo has been where fb is today. After a while, they both got squeezed out of Market Share and fell of the bandwagon, because of stagnation. What once was novice, new and interesting, became a utility and not so exiting anymore. If fb doesn’t evolve continuously, this will happen to them as well. Someone else will come along with a more interesting offer, a better way of “getting social” and make fb look boring. So how to avoid this?

Apple has shown us how to do it.Apple today is not about the sleek design, the cool products and their features’, but instead much more about embedding itself. iTunes is what makes Apple tick. Could you imagine Apple being where they are today without iTunes? The Apple products are a natural extension of the service iTunes offers. With the new iBooks2, Apple is making inroads to catching the Market for students’ literature as well. iTunes is embedding itself so deep in the fabric of our daily lives, that we can’t replace it – and there’s no viable alternative.

So, with a war chest filled with cash, I would get to work to embed fb ever more deeply into the fabrics of people’s lives. Sofar fb has been all about the consumer. Companies have made inroads to accept fb at the workplace or let their staff use the platform to do business, but no one yet has gone the whole way and made fb a part of their intranet. The reasons are obvious: no security for corporate data. And fb does not really support what Enterprises needs in term of structured data reposits.

But with Microsoft as an investor in fb and having knowledge about the Enterprise Market’s needs, the way forward for fb has to be going “Enterprise Social”. Imagine fb replacing all those SharePoint Servers out there, with a social layer that ties into fb, without giving up the security of the data stored within the Enterprises.

"SharePoint has tons of built-in functionality for social networking, kind of a Facebook for the enterprise, if you will," Christian Finn, the Director of SharePoint product management at Microsoft says. Well, it aint fb yet though.

This is where I would put the money if I was Zuckerberg; to overcome any technical hurdles, offer Enterprises an easy way to go social with a secure tie in to fb (as we know it today) and make sure the next big wave of users added are the corporate professionals. Given a success, fb would become so embedded in our lives, that we would stop using Emails at all, instead sharing documents over fb and chat and collaborate on fb “spaces”. The potential valuation of fb then would be much higher than the $100b today. Go for it Zucki!