California's New Gold Rush
Facebook is going to IPO in a few weeks and San Francisco will be flush with hundreds of
newly minted multimillionaires. Whether or not you agree that Facebook is worth $100
billion, the event itself illustrates American entrepreneurship at its most successful, as well as the salutary economic consequences that have made our country the largest economy in the world.
There are two major benefits to the upcoming IPO. On the highest level, it inspires innovation. Every young twenty-something sees the limitless possibilities of their own intelligence and sweat. Startups from Austin to Boston buckle down and work harder, eager to -- as Steve Jobs used to say -- “put a dent in the universe.” It is this mentality that drove the industrial revolution, invented modern physics, and will move our country’s economy to the next level.
On the smallest level, Mark Zuckerberg and his friends are going to be rich. These are the
people who will buy or build houses over the next five years. They will spend their money at restaurants, they will get their clothes dry-cleaned and they will reinvest in other startups or perhaps a small business. This is exactly what we mean when we talk about value creation. Like.
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Aug '10
Re: California's New Gold Rush
These are also the people who will be courted by left-wing NGOs and Democratic Party fundraisers.
Aug '10
Re: California's New Gold Rush
The grand irony is that Zuckerberg does not actually want to do an IPO. By all accounts, he likes having total control at FB and not having to subject his product to the short-term goals of public investors.
But SEC regulations force a company to list publicly once the number of shareholders exceeds 500, as well as file certain financial disclosures. There was legislation proposed last year to increase that limit, and it was passed as part of the JOBS Act 3 weeks ago.
I'm not sure if FB's IPO is proceeding under the old rule, if they still surpassed the new limits, or if the IPO gained so much momentum it was just too hard to stop. But it can be argued that while FB itself is a result of American innovation, the IPO is an artifact of federal regulation.
Jul '11
Re: California's New Gold Rush
Well that is the beauty of America. Good for them.
Feb '11
Re: California's New Gold Rush
IPOs aren't what they used to be. Facebook will create how many new jobs in the US?
Aug '10
Re: California's New Gold Rush
Directly or indirectly?
Do you count all the companies who are hiring data miners and "Social Media Specialists" for their marketing departments?
Do you count the politician's assistants who update their bosses' Facebook page? ;-)
Feb '11
Re: California's New Gold Rush
Misthiocracy
Directly or indirectly?
Do you count all the companies who are hiring data miners and "Social Media Specialists" for their marketing departments?
Do you count the politician's assistants who update their bosses' Facebook page? ;-) · 19 minutes ago
OK. So that's another 500 or 600 jobs.
Re: California's New Gold Rush
Facebook itself is creating scores of new jobs directly, the money saved from outsourcing some labor allows them to spend more on talent/experience and hire more at a higher level. Furthermore, those "winning" from this IPO and getting employed by FB will have enough discretionary spending to power a nice sized town, if not a small city. It's hard to look at this, or even the outsourcing element, as bad for the U.S. economy.
Aug '10
Re: California's New Gold Rush
As a result of the IPO alone, I would say none. The traditional point of a tech IPO is to raise money to pay for expansion, but Facebook is not hurting for money. They are quite profitable already and have a large cash cushion; they just bought Instagram for $1 billion, and some AOL patents for another $500 million.
If they were going to fund job-creating expansion out of their cash cushion, they would have done it by now. Adding more cash isn't going to fuel anything except maybe more acquisitions. Besides, it is an entirely virtual, web-based company; it leverages creativity and code to grow, not manpower.