Tell Me a Story: BigBang3
Two groups of experts in separate teams across the globe are getting dangerously close to events that will change their respective fields. For physicists working on CERN, it’s the search for the Higgs particle, the elusive piece of sub-atomic matter whose existence could help prove the Standard Model of Physics. Across the globe in Silicon Valley, Lawyers and investment bankers are huddling over a far more complex and bulky prize, but one which could yield nearly as many secrets: the Facebook IPO.
The Facebook S-1, as the application to go public is called, will be more widely read in Silicon Valley than a Harry Potter or a Jim Collins tome. I think the venerable Kara Swisher of All Things D, captured the anxiety or excitement in her Wednesday am Headline:
It’s expected this week, partly with the hope than the six-month lockup would expire before any new “Millionaire’s Tax” would kick in, enabling the first tranche of employees to take a payoff. Facebook is also thought to have exceeded the 500-shareholder limit for private companies who want to avoid the drumbeat of public-company filings.
The basic financials will be most interesting. How does the Facebook financial model work in detail? Who are the biggest advertisers and sources of revenue? Traffic? How profitable is it? Will they suggest new metrics, as Groupon did?
The section on risks is always fascinating, and it will be laced with red-herring warnings like “our CEO is 27 and has no significant prior employment history.” I am eager to read more about how defensible they believe their position is, beyond the nearly one billion registered users. Will they reveal how active those users are? How many person/hours per quarter are spent on FB by a typical user? How does that compare with other media? How much of that is mobile? Is their lead more or less defensible or mobile devices?
That brings us to the next closely-watched area: patents. Because they are corporate assets, companies often discuss patents in their filings. Do any of the patents hint at the beginning of a Facebook phone or connected device?
The big Kahuna of all of these is valuation, currently thought to be $75-100 billion. And that in itself will cause dozens if not hundreds of startups across the world to deflate or inflate their valuations accordingly. On Tuesday, Ben Horowitz of the influential Andreessen-Horowitz firm spoke about current valuations (but not the Facebook deal, since his partner is an investor):
Big Bang One brought us a firmament of internet superstars from Amazon to Yahoo, and with them a new way of looking at companies and measuring their results. And eventually new reasons to cry when the tax season of 2001 sounded the alarm bell. [My timing, as always, was excellent: A show that I would later anchor on CNNfn, The N.E.W (for New Economy Watch) Show first aired on the days the NASDAQ peaked. The second big bang was Google’s IPO in 2004, which singled again that capital markets were really ready for risk in this area again. So come and get me, Big Bang 3. I’ve got the S-1 on my nightstand.
Tell me a story.
