Facebook’s IPO: See How the Company Is About to Change

Alden Wicker
Posted

You know that little website you’ve been sneaking peeks at in between work projects all day? Yeah, that one. The one that just told you your best friend from third grade is engaged and pregnant.

You can buy a piece of it starting today!

(Should you get in on Facebook’s initial public offering? We’ll tell you.)

Maybe the Facebook I.P.O. won’t make you rich or force you to renounce your U.S. citizenship to save on taxes, but it could change the way you use Facebook every day–whether you love or hate it, need it or have quit it entirely. (Think that Facebook can’t affect you if you’ve quit it? Think again; see below.)

That’s because the way a startup can act–with its creative, experimental, spaghetti-against-the-wall culture–is completely different than how a publicly traded corporation can act. Facebook is about to go from just a few owners to thousands of stockholders. And those stockholders are going to want Facebook to grow up, for better or for worse.

Here’s how the site could change and affect you:

More Data Mining and Ads

Facebook’s most valuable asset right now isn’t its team of crack developers, its mastermind of a CEO or even the software platform it’s built on. It’s your information. It has deep data on more users than there are people in the United States. It knows your favorite bands, when you broke up with your boyfriend and the people you associate with most. The question is: How will it mine that data without scaring you and angering the Federal Trade Commission? After all, the FTC has already cracked down on the precocious website once for consistently violating the privacy of its users.

Facebook is under even more serious pressure to monetize that data after General Motors, one of the three largest advertisers in the U.S., announced on Tuesday that it was pulling its advertising from Facebook, calling it “ineffective.” There are grumblings from marketers that people like you aren’t clicking on enough Facebook ads to make it worth the cost of those ads.

One thing is clear: You should be prepared for advertising that (Facebook hopes) will be better and better at getting you to like, follow and shop the brands its promoting. On the other hand, those “new and improved” ads could just be more annoying. Target uses a complex algorithm to figure out when you’re expecting a baby. Facebook? Well, you already posted your sonogram, didn’t you? And now, depending on how good Facebook gets at parsing your data, you might be seeing advertising for a lot of baby things right when you’re most likely to buy.

And Facebook dropouts, don’t think that none of this applies to you. It remains to be seen whether Facebook will continue to hold on to all your data even after you’ve yanked down your profile.

Less Anger

True to the “we do what we want” culture of young Facebook’s roots (as compellingly illustrated in the movie “The Social Network”) Zuckerberg used to develop new features and products in all-night hackathons. The “half-baked products”–as the Wall Street Journal calls them–that came out of these sessions would be implemented with little to no warning. Some products that were implemented to users’ chagrin included face recognition and the news feed.

For developers, features like these were fun and awesome, but for users, they were annoying–or worse–insidious, seemingly designed to strip you of the last semblance of privacy. Zuckerberg responded to outrage surrounding the introduction of the news feed, which broadcasted your every social twitch, by telling users to “breathe.” Thanks, Zuck. That makes us feel better.

But that cavalier and condescending approach has already begun to change. You might not be too thrilled about Timeline, Facebook’s new format for displaying your life on your profile page, but you had plenty of time and instructions on how to interact with it and edit it to your best advantage before it even launched. After easing users into the transition over six months–an internet eon–Facebook will finally force you to switch (if you haven’t already) on the 21st.

You’ll probably see more of this measured approach once Facebook goes corporate. That’s because any controversy or threats of mass exodus will trammel Facebook stock. Zuckerberg no longer has the luxury of ignoring Facebook groups called, “Boycott Facebook!” or he’ll risk losing a significant amount of money and his credibility as an effective corporate CEO.

Fewer Bugs

In a similar vein, Facebook will also have to be more buttoned up in its approach to coding. As the developers come up with new ideas, instead of hacking them together and shoving them out the door, each new feature will be extensively tested to make sure it works, and works well.

The motto up until now has been “Done is better than perfect.” But with stockholders watching, a big break in code that could lead to serious privacy violations or outraged users could spook investors and send the stock price down. Expect Facebook chat to actually work, and other new products to be free of holes, bugs and breaks.

More Paid Products

Zuckerberg now seems keen on bringing in new streams of revenue and a slew of experiments have come out of the website lately. One initiative allows users in New Zealand to pay the equivalent of $1.53 to highlight their post to make sure all their friends see it. Next week Facebook will launch “App Center”, where you’ll be able to find and purchase apps. It’s even testing a storage option for your data. That’s currently free, but the Wall Street Journal speculates you could eventually get additional storage–for a price.

So Is This Good or Bad?

It’s impossible to talk about the I.P.O. of this tech giant without mentioning the I.P.O. of another tech giant: Google.

So it could be instructive to see how your experience with Google has changed since it’s gone from startup to money-maker. Google has always been a quirky and innovative company, and has remained so even after its I.P.O. It helps that it has consistently delivered huge returns, so investors are happy to let it do its thing.

But it’s not completely immune to the pressure to perform. As a public company, Google has gone over the line in violating your privacy. And it’s also been accused of engaging in antitrust practices and “abusing its power.”

What about innovation? Well, millions of users just can’t do without its email (developed right before the I.P.O.), documents (after the I.P.O.), calendar (after), AdSense advertising (before) and–last but certainly not least–search function. Google+, it’s latest product? Eh.

Overall, it seems that if Facebook can take some pages out of Google’s playbook and stay on its toes, it could continue to innovate and roll out new, useful features, while keeping your interests and privacy concerns in mind. We think this could be great for everyone–as long as you don’t mind a few more ads.

  • Val

    GREAT breakdown of what the IPO may mean for us non-investors. Thanks!

  • http://twitter.com/MosedaleConsult Mosedale Consulting

    It will be interesting to see what the future holds for Facebook – dare I mention the “bubble” word? I see interest waning amongst my own peers…