Here is a detail from the Wall Street Journal’s article today about how Morgan Stanley tech banker Michael Grimes excluded the other underwriters from having much of an active role in managing and pricing the Facebook IPO and I cannot stand how good it is:
A page of his pitch book to other companies,* which he calls the “Driver/Navigator Model,” shows a black sports car. A company about to go public, the pitch reads, must choose between a “single driver [who] operates the steering wheel, gas, brake and clutch,” or the “two driver model, where the car literally has an extra steering wheel, gas, brake pedals and clutch for a second driver.” Morgan Stanley, the pitch says, “favors the sole bookrunner approach.”
Imagine being persuaded by that! You could construct a hierarchy of pitchbook pages based on how persuasive they’d be to a rational person; I’m the sort of person who tends to find tables of numbers most compelling, followed by charts (I know, I know), followed by functional diagrams of functional things (“we put the mortgages in this green box, and then sell them to this red box”), followed I guess by pages of texty bullet points, followed last of all by METAPHORICAL CLIP ART.** Read more »
Remember Facebook? Last night it filed an amended S-1 for its IPO including a bunch of contracts. Those contracts were so boring and bog-standard that … well, this:
SharesPost Financial Corporation completed its auction of 150,000 shares of the Class B Common Stock of Facebook, Inc. on February 8, 2012. A clearing price of $44.00 per share was established at the auction.
Using the 2.33bn shares implied by the “pro forma diluted share count” in its prospectus, that gets you about a $103bn pre-money valuation, or up about $10bn from this time last week. Assuming a constant price/Likes multiple, which is I assume how social networks are valued, that must mean that Facebook is approaching 3 billion “likes” per day.
The fact that you can get, um, weekly market prints for Facebook means that it is in a weird place for a private company, with a certain amount of liquidity and price transparency provided by private marketplaces. Investors who want to get out can, and accredited investors who want to get in also more or less can. So some think that FB is in essence already public, with most of the trappings of public trading for everyone but non-accredited retail shlubs. This is a good example of why that’s not necessarily so. Read more »
I started out not really caring about the Facebook IPO except as part of a vague stunt-driven desire to get some shares so I could tell you all that I’d gotten some shares. I now think that that plan was foolish, though I look forward to telling you how I was fleeced by retail brokers who pretended that they’d get me some shares. But as someone with a pretty meh reaction to good corporate governance, I’ve developed a certain fondness over the past, um, six days, for Facebook’s terrible corporate governance, which is laid out in a section of the IPO prospectus – right after the Hacker Way – titled “I’m CEO, bitch,”* and which involves Mark Zuckerberg controlling all decisions for the rest of his natural life and any cryogenic extension thereof.
CalSTRS, however, isn’t so sure:
“We are in fact in the beginning stages of engagement with Facebook” over governance issues, Ricardo Duran, a spokesman for the pension fund, said in an interview. “We are planning to send them a letter.”
Well that’s just super. Read more »
One thing about Facebook is that Facebook doesn’t need the money that Facebook is raising in the Facebook IPO that Facebook just filed. (Did you hear?) It’s got almost $4bn in the bank and it can’t even be bothered to pretend that it’s got any plans for what to do with more:
The principal purposes of our initial public offering are to create a public market for our Class A common stock and thereby enable future access to the public equity markets by us and our employees, obtain additional capital, and facilitate an orderly distribution of shares for the selling stockholders. We intend to use the net proceeds to us from our initial public offering for working capital and other general corporate purposes; however, we do not currently have any specific uses of the net proceeds planned.
And while the selling shareholders undoubtedly will be happy to be able to sell in the open market, they can kind of do that now, with robust SharesPost and SecondMarket trading at high-eleven-figure valuations. Basically Facebook is IPOing because it’s got so many shareholders that it is legally required to register so might as well raise a few yards of rainy-day money while it’s at it.
When that’s your posture – and, to be fair, when people are beating down your door to buy your stock – you can be pretty, pretty cavalier with shareholder rights. What that means here is a two-class share structure (insiders get 10 votes per share, the public gets 1 vote), a board of directors that is not required to be independent, and Mark Zuckerberg controlling 57% of the voting power of the shares (while only owning 28%) via really quite all-encompassing voting agreements with current investors, some of which last until he dies. If your theory of public corporations is “they should be controlled by and for the benefit of the public shareholders,” this may trouble you. If your theory is “I’d follow Mark Zuckerberg anywhere,” then, carry on.
Other things to know or avoid knowing: Read more »
As the users of Mark Zuckerberg’s poking machine among us can attest, there are many things you can expect from your Facebook friends. You can expect that they’ll keep you abreast of every insignificant moment of their entire lives. You can expect that they’ll post public affirmations about being “stronger than this” following a break-up or a shitty lunch. You can expect that, when taking a trip, they’ll let you know the flight number, when they’re on the way to the airport, going through security, sitting at the gate**, waiting to take off, defying the request to power down their phone, losing said battle, touching down on the runway, waiting for their bags and still thinking about the person across the aisle who gave them a weird vibe. You can expect that they’ll upload countless photos of their trip with at least one set devoted to posing (alone) on the beach like they’re shooting the god damn Sports Illustrated swimsuit edition, having forced their travel companion to play photog. You can expect that they’ll assume you want to be friends with their household pet. You can expect that they’ll ask you to send positive thoughts into the universe when said pet when it comes down with a common cold.
As a card-carrying member of Facebook, UBS trader Kweku Adoboli was aware of the social contract one enters when becoming friends with people on the ‘book and held up his end of the bargain, dutifully ‘liking’ the status messages of friends forced to sit through 30-minute delays at Heathrow and keeping his fingers crossed that Mr. Fluffernutterbigglesworthjosecanseconiner would recover soon. Which is why it must have stung pretty badly when, after all he’s done for his so-called friends, they couldn’t toss him one bone and help him out of a tight spot. Read more »
There was lots of chatter this morning about the possibility that Microsoft is negotiating to buy Yahoo‘s search business. But the latest rumor is sure to set the internet ablaze with speculation–people are saying that after inking the deal with Yahoo, Microsoft will turn around and buy internet favorite Facebook.
“What a move this makes. Yahoo gets everyone off their back, Microsoft gets a credible position in search, and buys Facebook to compete with Google,” Furrier.org writes. “The price about $45 billion.”
Silicon Valley Rumor: Microsoft to Buy Yahoo Search and Then Facebook [Furrier.org]
We at my apartment (so me and Marissa) have heard that the invasion of employee privacy by Wall Street firms has taken a bold step forward: hacking into employee Facebook accounts. According to a sometimes reliable, sometimes not source, the human relations department at a certain investment bank has been using creative technology to get into the profiles of current (and prospective) minions, to monitor their off (and on) the clock activities. This is bull shit and I’ll tell you why: it would be one thing, if you and those with the power to get you fired willingly entered into a Facebook friendship, thereby granting them full-access to see what’s a-poppin’ in your personal life whenever they pleased. But this means that someone who doesn’t even have the bedside manner to ask “You wanna do this” first, or worse, someone whose online friendship you’ve formally said no thanks to, can see that you’ve added “Boiler Room” to your favorite movies (sheep) and changed your status from “Billy is working at Bear Stearns” to “Billy is getting a public citation for having relieved himself on the sidewalk in front of Bear Stearns which he wouldn’t have had to do in the first place if those FUCKS hadn’t fired him.” Anyway, try and guess which firm we’re talking about via Facebook message (thereby granting me access to see your profile for one week even if we’re not friends) and I will respond shortly.
Because he’s a genius—or maybe just one of the few remaining people not seduced by the idea of a site that refuses to put a cap on the amount of useless crap “applications” it will offer, none of which does anything to better facilitate the stalking/slaying of potential prey—Steve Ballmer said that he regards individual social networks as a “fad,” seemingly implying that Microsoft will not be making a $300-500 million investment in Facebook (for a 5% stake that would place the company’s value at around $10 billion). (You have Christ, we have wishful thinking.)
“I think these things [social networks] are going to have some legs, and yet there’s a faddishness, a faddish nature about anything that basically appeals to younger people,” Ballmer told Times Online. Though he acknowledged some vague potential value in Facebook’s 40 million users, he noted that “There can’t be any more deep technology in Facebook than what dozens of people could write in a couple of years,” a point that makes the valuation Zucks (claims not to be but probably) is seeking, for a site expected to achieve revenues of only $150 million this year, what’s the word? Insane. (Ridiculous. Dumb. Adidas shower shoes. Etc.)
Ballmer also, somewhat awesomely, added that sites like Geocities “had most of what Facebook has” years ago (and without the personification-of-a-smug-twat grin). He did not comment on why Mark Zuckerberg was seen in Seattle last week (a spotting that fueled speculation about a Microsoft investment). However, the tone of his voice seemed to hint at a combination of a. (“Bryan Adams with George Thorogood concert at the WaMu theater”) and e. (“Annual pilgrimage to Brandon Lee’s grave in Lake View Cemetery”).
Earlier: Cutting The FaceBook/Microsoft Deal Rumor Off At The Knees
Ballmer: Facebook risks being ‘a fad’ [Times Online]
By now you know the rumor that Bill Gates has lost his mind and is considering an investment of $300-500 million for a 5 percent stake in Facebook, which would value the social networking site at twice what Rupert Murdoch paid for Dow Jones. (Making trashtastic MySpace worth $11-12 billion, according to Lehman Brothers analyst Vijay Jayant.) The fact that ‘book CEO Mark Zuckerberg was spotted Tuesday in Seattle, according to ‘Fortune’ reporter/stalker David Kirkpatrick, gives weight to the rumor, and lowers the chances that it’s not all some horrible joke and/or plot by Steve Jobs to make Bill Gates bad.
But since we’re still holding out hope that Microsoft isn’t planning on parting ways with a truckload of money for a website filled with worthless plug-in applications and at which one user can “poke” or “tickle” another and then laugh to him or herself about it, we’re going to come up with a more plausible explanation for Zucks’s visit to Washington and stick with it. The continued existence of the Bill & Melinda Gates Foundation, and the disenfranchised who so desperately need its help, depends on this rumor being bull shit. So you tell us:
The real reason Mark Zuckerberg has been seen in Seattle is:
a. Tonight’s Bryan Adams with George Thorogood concert at the WaMu theater
b. For a naughty game of hooky with David Kirkpatrick, who writes that, having “gotten to know [Zuckerberg],” who is “driven by a conviction that what he is doing will make the world a better place” and “is a nicer person than Gates,” has come to the conclusion that “it may be…worth quite a few hundred million for any company to get into bed with Mark Zuckerberg.”
c. Adidas shower shoes.
d. Coffee date at flagship Starbucks with Kofi Annan to discuss how Facebook can get involved in the Arab-Israeli conflict.
e. Annual pilgrimage to Brandon Lee’s grave in Lake View Cemetery.
f. a. and b
g. a. and c.
h. a and d.
i. a and e.
j. b and c.
k. b. and d.
l. b. and e.
m. c and d.
n. all of the above
o. none of the above
Zuckerberg Sightings Fuel Deal Speculation [DealBook]
Facebook CEO visits Seattle, Microsoft schemes [Fortune]
In the UK, where employers haven’t quite started mass firewalling facebook from corporate servers, a new study estimates that social networking productivity drainers like facebook can cost firms up to 130 million pounds a day, or over $260 million.
The study was conducted by employment law firm Peninsula and tracked 3,500 UK companies, estimating that 233 million hours are lost every month to social networking dalliances at work.
In other social networking news, those 300 facebook friends you have aren’t really your friends. Despite the massive numbers of people using these sites (MySpace is still the most trafficked site on the internet (we think even including porn, which isn’t usually accounted for)), studies are showing that an individual’s number of close friends does not increase with rampant online social networking. A huge contact list on a social networking site belies your real social status – of being a huge loser.
We’re still waiting for the study confirming that the number of times you have your shirt off in facebook pictures is inversely proportional to how often you get laid.
*Pictured – Otis may have never met Milo had he been sitting at his computer.
Facebook ‘costs businesses dear’ [BBC]
Britain’s largest bank announced today that it will not be implementing a plan to make money by charging interest on graduate overdrafts, because Facebook.com asked it not to. HSBC caved after catching wind of a group on the social networking site called “Stop the Great HSBC Graduate Rip-off,” whose 5,756 members requested that the financial institution *not* charge them interest, referred to the bank as a “spin machine,” and encouraged friends and family to go elsewhere out of spite. (One member, Martin Deakins, posted on the group’s wall: “YEAH see HSBC you cant just f**k us over as and when you feel like it.” Another, Michael Dean Anderson, perhaps a mole sent by the banking giant, wrote: “You all really need to get over yourselves and just pay it back. Fucking freeloaders: hate ‘em. Much love.”)
The reversal marks a victory for grads who would sooner opt to have money versus not have money, and a new low for the bank (next, Goldman Sachs’s GEO will slash fees from 2/20 to 0/10 to 0/0, under pressure from a group formed by a bunch of Stern kids pushing their luck). Some might also regard it as accomplishment for the Facebook family, though it disappoints us greatly to see something that was created soley for the purposes of stalking classmates and/or getting laid to be used for such constructive means. Stuff like this was never in Adidas flip-flop boy’s business plan.
HSBC submits to online student protest [Times Online]
Can HSBC Really Be Just That Dumb? [myvestauk]