It wasn't long ago at all - just a few months, really - that Facebook was christened as the salvation of the Silicon Valley. Everyone wanted to work there; everybody wanted a piece of their IPO; everyone dreamed of how rich they could get if they could get just a little slice of the social media pie with their own three-person startup backed by $5 million in venture funding.
Things have changed quite a bit. With Facebook's stock now at a 50% loss (measured against its high, set within minutes of the May 18th initial public offering), it's becoming clear that just about every entity - human, corporate, and the way things are going, perhaps even extraterrestrial - that touches Facebook gets the zap put on them. Off the top of my head:
+ Zynga - whose stock is down over 80% from its own high, having attached itself to the Facebook star and the promise of Earth's population playing FarmVille for the rest of their lives;
+ NASDAQ - which is still struggling to come up with a huge payoff to the affiliated parties that lost so much money by participating in one of the highest-visibility IPOs in history;
+ Broker/Dealers - such as Knight Capital [6], which lost tens of millions of dollars be being involved with the completely botched IPO;
+ The Investing Public - which has lost billions and billions (best said in a Carl Sagan voice) by jumping on to the FB bandwagon;
+ Newer Facebook Employees - There is a caste system already in place in Menlo Park at the Facebook headquarters, located just a couple of miles from where I'm sitting. The brahmin are those who showed up early and have secured their billions (or hundreds of millions) by being at the right place at the right time. The untouchables are the poor slobs who came on board more recently and whose options are deeply underwater. The rich kids might decide just to take their fortunes with them; the rest of the employees will realize that they are pretty much working For Just A Salary (instead of guaranteed millions from the explosively successful FB options) and might feel a skosh resentful.
+ SecondMarket, SharesPost, and their ilk - Surely you recall how much press and attention these web sites were getting - - accredited investors got the privilege (!) of buying stock in firms like Twitter and Facebook from other individuals. I don't recall where Facebook peaked pre-IPO, but it at well over twice the current public market price.
+ Startups - Lastly, the bloom's fairly well off the rose here in the Silicon Valley with respect to social startups. After all, if the cream of the crop like Facebook has become a worldwide embarassment, what sort of appeal does yet another three-person firm of 21 year old kids have?
Of course, I think all of this is actually pretty healthy. The lunacy around Facebook was getting completely ridiculous, and now as Facebook confronts reality and recognizes that the suck part of being public is actually having accountability to shareholders, maybe they'll focus on creating products that are at once popular, useful, and very profitable. Suffice it to say that a lot of folks owning FB have decided that they're in it for the long haul at this point. They don't really have much of a choice.
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