Facebook's IPO motives: domination of the web
One of the tech world’s most persistent rumours made solid, Facebook’s official filing of its forthcoming initial public offering generated the predictable torrent of scrutiny and discussion. But much of that discussion centred around the IPO’s oddness. Though going public is something of a rite of passage for a company of Facebook’s size, it isn’t easy to pin down why it’s choosing this moment to do so.c It’s true that, through its many private offerings, the company had acquired nearly enough investors to legally require it to make public much of the information in the IPO filing. But there are complications to being a public company; the trade-off is the ability to raise money. And Facebook doesn’t ostensibly need the capital. It has $3.5 billion on hand, has been cash flow positive for some time now, and hasn’t struggled to raise money privately. So why now?
The answers lie in Facebook’s long-term ambitions. But unlike many companies that might use new capital to nudge up market share, Zuckerberg & co. have grander goals. More than introducing new products or marketing strategies, Facebook wants to cement its position as the social backbone of the web—and entrench itself as more cultural phenomenon than corporation.
Credit: Gabriela Hasbun Three years ago 1-800-Flowers, long a pioneer in Internet marketing, became the first national florist to create a fan page on Facebook. It used the free page to build relationships with customers and sell selected products,