Facebook IPO raises question about company’s future, innovative spirit

The Takeaway

Facebook will beging trading its stock publicly on Friday in what is a highly-anticipated IPO.

Doubts about CEO Mark Zuckerberg’s managerial skills and concerns that the company is being overvalued have dampened the hype, but the business and technology worlds are still buzzing in anticipation of Friday’s offering. Whatever happens, though, Facebook is in for changes, especially if it’s valued at $100 billion, which some experts have speculated.

Henry Blodget, CEO and editor-in-chief of Business Insider, doesn’t think profits for the social media giant will slow down anytime soon.

But there are warning signs for potential investors. Mark Zuckerberg has made clear his emphasis going forward will be Facebook’s social mission, not its business mission.

“That should scare any investor,” he said. “It’s heresy on Wall Street. Most CEOs are supposed to say, ‘What I get up in the morning for and every minute of the day is focused on creating shareholder value.'”

Zuckerberg doesn’t care about that. Blodget said he cares about funding the “social mission” of Facebook. He projects that Zuckerberg will make short-term decisions over the next few years that will drive investors crazy.

But Douglas Rushkoff, author of “Program or Be Programmed: Ten Commands for a Digital Age,” projects that an eye toward money-making will kill Facebook’s innovative spirit and hurt the company in the long run. That’s an accusation that’s often leveled at tech startups.

Some have compared Zuckerberg’s style to that of Steve Jobs, and while the comparison may be apt, it also offers a cautionary tale.

“If Steve Jobs is in the example, it works a whole lot better 10 years later,” Rushkoff said.

Jobs was famously fired from his own company but later returned to take Apple to the point where it’s among the most valuable publicly traded companies in the world, when measured by market capitalization.

Rushkoff believes the skills of a good CEO are usually different from the skills of the sort of inventor that produces Facebook, or the Apple computer.

“Really balancing the needs of your employees, the needs of your customers, the needs of your technology and then the needs of those many, many shareholders out there,” Rushkoff said.

Blodget thinks people are selling Zuckerberg short and that he’s learned a tremendous amount about what it means to manage a large company.

“He’s built a great team underneath him. He has very carefully delegated the pieces of the business he’s not interested in, namely the business itself, finances, the IPO, dealing with investors, to other executives who are supremely talented,” Blodget said. “He meanwhile has focused on Facebook’s service. Thus far, in his eight years at the helm of the company, he’s had a very good vision for where things are going and how the product should work.”

Rushkoff said he’s disappointed in how Facebook’s IPO is structured. He cited Google’s more innovative IPO, where the price was arrived at via auction and bidding by regular investors, and not large institutions as is common and as will be done with Facebook.

“I felt like if (Zuckerberg) was going to come in and really shake things up, what about coming up with a more social way to develop an IPO,” Rushkoff said.

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