Conventional wisdom says that everything changes once a company goes public. Instead of helming your own ship, you now have to kowtow to the voracious Wall Street masters, ever hunting for bigger and better quarterly earnings. You have to play nice with the press, for fear of bad news leading to a short of your stock. And most of all, you have to work really, really, really hard to keep your users happy.
So far, CEO Mark Zuckerberg and his merry band of iconoclasts at Facebook have blithely chartered their own course, doing what they want and whenever they want. Release a feature that has users screaming bloody murder (Beacon? News Feed?) Whatev’s. Get lambasted in the press for letting other websites surface users’ photos on their websites (Instant Personalization)? Tell someone who gives a damn. Get slammed with 20 years’ worth of privacy audits for being a little too carefree with one’s privacy policies? OK, well, yeah that one sucked.
More Facebook Coverage
Be sure to read about the Facebook investors poised to make billions from the social network's impending IPO. And take a deep dive into our earlier profile of Mark Zuckerberg: Hacker. Dropout. CEO. Then compare the Zuck of yesterday with the Zuck who just penned a letter to investors. Plus, dig into all of the revenues and user numbers. Check back here for more to come in the days ahead.
But once they’re a public company, they’re going to buckle down, aren’t they? Keep a closer eye on money coming in than on cool features going out? Try not to rock the boat of public opinion too much? Well, maybe. And then again, maybe not. Here are three things that will change once Facebook goes public. And two things that won’t.
Three Things That Will Change
More (Innovative) Ads
"As a public company, Facebook is going to be under pressure to demonstrate revenue--and demonstrate that they’re growing their revenue," CEO of AKQA Tom Bedecarre tells Fast Company. The company currently has two main sources of revenue: advertising ($3.8 billion in 2011, according to eMarketer) and partner payments from apps that sell things on the Facebook platform (the social network takes a 30% cut).
At AKQA, Bedecarre handles the digital marketing needs of top-shelf brands like Nike, Visa, and Unilever. So far, their options on Facebook have been few: mostly those little ads on the right rail of your News Feed and Timeline. But over the last decade, advertisers have gotten used to a bevy of options at other sites--pop-ups, home page takeovers, video.
Don’t expect Facebook to suddenly turn into a Geocities hell just to serve up numbers to Wall Street. (CEO Mark Zuckerberg "has always believed that anything that slows down user focus and user centricity is unacceptable--the kiss of death," David Kirkpatrick, author of The Facebook Effect, tells Fast Company.) But the company has long invested energy and resources in innovating novel ad units that serve the needs of both advertisers and users. Sponsored stories, for example, get advertisers that oh-so-valuable word-of-mouth while serving up ads that are more interesting to users. (Can I tell you how much happier I am to see ads for Tough Mudder competitions and Russian River cottages for rent on Airbnb on my Facebook pages, than I was to be on the receiving end of wrinkle creams and weight loss products shilling?)
Now that Facebook has flung open the Open Graph and allowed reams of third-party applications to integrate with the social network, the amount of insight that Facebook gets on what individual users are interested in is going to go through the roof. (By turning the Foodily app on inside Facebook, for example, the site now knows that I like Cherry-Berry Tea Smoothies, Baked Kale Chips, and Minty Pea Dip (but not Hostess Cupcakes, the yellow ones--a girl’s got to maintain some level of privacy). Count on Facebook developing new types of ad units that allow marketers to do an ever-better job of homing in on their target customers.
Bottom line: Are you a marketer who wants more access to Facebook’s 800 million users? Start thinking about information about your product that could be something a user would want to share.
Tech companies that want to expand their offerings have two options: Build or buy. Buying makes more sense when someone else has already developed a technology that fits neatly into your core business. (And is willing to sell for a not-too-egregious price.) We don’t expect Facebook to go shopping for Netflix or a music startup like Spotify. (Facebook is happy to be a place where users share media, but it’s not in the media creation or distribution business.) But Path? Instagram? Pinterest? All of those make sense. Facebook’s core mission is (verbatim) "…to give people the power to share…." The company has relentlessly focused on helping the little guy annoy their friends with photos, links, and, yes, their critical opinions of Tom Cruise’s indefatigable need to save the world one. more. time. in the latest Mission Impossible franchise. Once Facebook has a boatload of cash, it’s going to make pulling out that corporate credit card in the great Silicon Valley/SOMA Shopping Mall all the easier. "Facebook will throw its weight around to acquire companies that fit into its strategic plan," John Battelle, author of The Search (about Google) and founder and executive chairman of Federated Media Publishing, tells Fast Company. "I’m sure their corporate guys are sharpening their swords."
Bottom line: Think you’re a potential Facebook acquisition target? Start polishing your pitch.
Public companies are under increasing scrutiny not just from Wall Street but from regulators as well. Staying private has protected Facebook from heaps of soul-crushing paperwork. But that will change once it goes public. Facebook will likely follow in the footsteps of its Silicon Valley brethren and try to get in front of the problem, working on convincing DC to shape laws that don’t put egregious constraints on the things that Facebook wants to do. After all, why else bring former Clinton White House veteran Joe Lockhart onto your team, than to help you navigate the corridors of power and help lawmakers understand that what you’re doing is actually good for the country--and consumers?
Bottom line: Are you an old Washington hand looking for a new and exciting career? Start friending Facebook’s DC team.
Two Things That Won’t Change
The Relentless Pace of Innovation
Asked whether going public would have any impact on Facebook’s product roadmap, the people Fast Company spoke with almost universally said, No. Nada. Not a chance. "I absolutely expect the same pace of innovation," says Kirkpatrick who, after chronicling the rise of Facebook from dorm room side project to Silicon Valley powerhouse, may know Zuckerberg better than anyone. "It’s critical to Facebook’s viability to retain their culture of innovation and willingness to push further into new product directions and the direction of thinking harder and harder about stuff a user can benefit from."
And that includes stuff that users themselves might not always immediately see the benefit in. The company’s user base has howled at just about every major update the company has put out there. There was outcry when News Feed first came out--the idea of updates being broadcast to others was upsetting to some users. Same when Facebook released Instant Personalization, which allowed other sites, like CNN, to show you what your friends Liked on their sites. And now there’s word that as many as half of Facebook’s users aren’t all that keen on Timeline.
"Knowing Facebook’s history, they’re going to plow right on through," Altimeter Group founder Charlene Li tells Fast Company. They know users are often uncomfortable with the changes they make, but they usually chalk it up to the fact that people don’t like change. They tend to believe that users will eventually come around. And they’ve tend to be proven right. Beacon aside, who would want to give up News Feed today?
Bottom line: Hoping that going public means Facebook will stop messing with your Wall? Fuhgeddaboudit
Zuckerberg The Product Guy/Sandberg The Suit
Zuckerberg first love has always been the Facebook product itself. There’s nothing he loves more than rolling up his sleeves and getting down and dirty with a set of mockups and a prototype or two. So while the Zuck will toss on the old jacket-and-tie and tap dance through the IPO dog-and-pony, as soon as it’s all over, it’ll be back to Menlo Park and the product, while COO Sheryl Sandberg (and CFO David Ebersman) continue to sweet talk advertisers and analysts alike.
Bottom line: If you’re a New Yorker hoping to catch sight of Zuckerberg spending more time wining and dining Wall Street types, better bone up on what Sandberg looks like instead.
[Image: Flickr user Marco Derksen]