Facebook hits the road to woo investors ahead of IPO

May 8, 2012

Facebook’s roadshow to woo investors is in full swing The Post’s Hayley Tsukayama reports :

Mark Zuckerberg showed up to a New York event in his customary black hoodie and sneakers — it seems only meeting the president will wrestle him into a jacket and tie.

The roadshow itself was said to be uneventful, with CEO Zuckerberg and other executives answering just a few questions about the company’s strategy in China, its acquisition of Instagram and its plans for mobile products, the Wall Street Journal reported.

When it comes to the Instagram deal, Zuckerberg reportedly told potential investors that he’d “do it again.”

Facebook also visited Boston Tuesday, but — according to the Boston Herald— Zuckerberg was not in attendance. The company is also scheduled to head to Palo Alto, Calif.

For your own taste of what the company’s selling, you can also visit its online roadshow, which is more or less a half-hour’s sentimental journey outlining the company’s vision of connecting the world.

As the social networking behemoth nears its IPO, Tsukayama wonders whether privacy concerns could affect the company’s revenue.

Now that Facebook has set its share prices, valuing the company between $77 billion and $96 billion, the question is whether it will be able to convince investors that it’s got a sustainable business model, can keep growing and find new ways to generate revenue.

And because advertising revenue is such a big part of Facebook’s business model, user privacy will have to be a major consideration for potential investors.

“If you use Facebook, you’re the product, not the customer,” said Bill Kerrigan, chief executive of the privacy company Abine, in an interview with The Washington Post. “The company’s financial success requires it to collect more personal information and make available to advertisers.”

Facebook itself is clearly aware of how important it is to keep up a good reputation on privacy, especially after settling with the Federal Trade Commission over complaints that it was making data public without user permission.

In the list of risk factors that the company has put in its S-1 filing, the company has listed that “changes in user sentiment” about the network’s “privacy and sharing, safety security or other factors” could have a bad effect on the company and its revenue.

As the company continues to build upon its vision of becoming a platform for application developers and other Web services, it will have to carefully consider how best to protect privacy. More partnerships with third-parties can lead to more revenue, but it also means that users will be sharing more information about themselves through apps.

That’s not inherently a bad thing — Facebook is a sharing platform, after all — but it does open up more potential for consumer confusion about managing their privacy settings. Users can manage their app settings through Facebook’s privacy menu. But many skip over or may simply not understand the data sharing terms they agree to when they use their Facebook account to log into an app such as Draw Something or Spotify.

One person who has said he’s not investing in the social networking giant is The Post’s Joel Achenbach . He gives a funny take on why he isn’t inclined to do so.

With the Facebook IPO show hitting the road, a lot of people are asking: Will Warren Buffett invest? And how about Achenbach? Of course not. I don’t run in that crowd (successful people). And I’ve developed a rule of personal finance that is incontrovertible: It would be stupid for me to make any financial move that I perceived to be intelligent.

The moment I think something’s a good investment, it isn’t.

This is an ironclad law of the universe, like the Second Law of Thermodynamics. This is why I’m worried about Twitter: I now have a Twitter account (@joelachenbach) and have started to tweet more regularly, so THAT’S over, a dead technology.

I’m the guy who bought WorldCom at $55 a share, just as the company had stepped off the cliff but before the forces of gravity had yet exerted their effect. I am STILL the proud owner of bought-at-the-peak Lucent stock, which now has some other name, having emerged from the mulch pile of corporate collapse.

Why not sell my old, failed, miserable stocks? Partly because I forgot my username and password for my online trading account. Partly because it would probably require paperwork and some complex tax write-off that I just don’t know how to do. More importantly, I don’t touch the stock market anymore. Burn me once, that’s your fault. Burn me twice, that’s my fault. Burn me about 17 times, that’s the fault of the people who raised me wrong.

I just don’t go near the market anymore, having been suckered into that game in the late 1990s, when I discovered that the Internet connection at my desk enabled me to invest — with the merest touch of a button, and after reading what seemed to be credible ratings reports by analysts — in companies that were just seconds away from evaporating into nothingness.

I tried to invest in solid companies, not the dot.com wonders. I picked stocks in companies that did good, old-fashioned stuff — established companies that made whale-bone corsets, and top hats, and wagon wheel spokes, and mustache wax, and quill pens, and papyrus. How could I have known these were bad investments?

I hope the Facebook IPO goes well, since I have a connection to the company via my FB page and the Washington Post Social Reader. But I wouldn’t know how to participate in an IPO — I assume they screen investors and I would not pass muster in some fashion.

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