Facebook IPO questions: impact on social, economy

There is plenty of talk about the Facebook IPO, which the company is expected to announce this week. The numbers being thrown about are eye-popping: The world’s largest social network is said to be seeking to raise $10 billion, and its valuation could be up to $100 billion, although of course those numbers are, as they say, fluid.

Initial public offerings are typically expected to boost the company’s regional economy, or buoy whatever industry the company is in. In Facebook’s case, there are a couple of key caveats.

• Chief Operating Officer Sheryl Sandberg at Davos over the weekend touted the company as a job creator: “Facebook is barely 7 years old and has 3,000 employees — and it has created more than 450,000 jobs in Europe and the U.S.,” Sandberg reportedly said. Many of those jobs have to do with the countless number of apps that have been created to run on Facebook. There’s no question Facebook has spawned a whole new industry.

A Facebook IPO may well breathe more life into Silicon Valley’s economy. But will it spark a run to luxury-car dealerships or single-handedly blow up another real estate bubble? Facebook employees and investors so far have not had to live on a ramen diet, thanks to private secondary markets that have allowed them to sell shares pre-IPO. (On SharesPost, Facebook is valued at about $82.5 billion.) One possible sign that Facebook employees have already been spending: brisk real estate sales in Palo Alto, Mountain View and Menlo Park, at least according to a realtor the Mercury News’ Peter Delevett talked with last month.

• How about boosting the rest of the industry? Remember that many of the other social players have already gone public. Among others, LinkedIn and Zynga both went IPO or IP-oh no last year. (Social-games maker Zynga has struggled, although its shares closed above their initial offering price for the first time last week. It’s up about 3.5 percent to $10.40 as of this post.) At this point, it’s hard to see how Facebook’s IPO would make much of a difference in either its partners’ or competitors’ businesses, says one VC/consultant, writing for Forbes.


Share this Post