With Facebook’s rapid growth and social media dominance, all the people who regret not making those two moves in the past are going to want to buy Facebook. Additionally, all the people who are excited about social media and see it as a key part of the future are going to want to own part of Facebook too.
Realize, though, that when Facebook or any company goes public, the game automatically changes. Now the company has to be looking at quarterly earnings, managing short-term profitability, and deciding how they can generate new revenue—all things they didn’t have to do before they went public. For Facebook, this means an increasing focus on revenue generation through advertising and other means.
The biggest problem is that these changes will interfere with the user interface. As I see it, Facebook has two options:
2) Facebook could allow more advertising on the site, but that interferes with the experience of being online with your friends and the conversations taking place. Again, the possibility of backlash is real.
Facebook needs to be careful here. While it’s true that Facebook is the leading social networking site, let’s remember that before Facebook, MySpace was the leader. So does that mean that Facebook, with their millions of users and market dominance, is forever the leader? No. Nothing is guaranteed.
For example, throughout the 1990s, Yahoo! was the leader of search until a couple of young guys founded a company called Google and did some major technology changes regarding search. In fact, history is littered with companies that were the category leader and got displaced, even when they had full and total dominance. So although Facebook is very big and has dominance, its future is not guaranteed. To stay on top, they are going to have to continue to do rapid innovation.
Facebook has done a good job with innovation, but they have some challenges ahead due to massive technological transformation happening over the next five years. Because of processing power, bandwidth, and storage all going through exponential changes, giving us super-computing capabilities on our phones and 3D experiences on our smart devices, we will be transforming how we sell, market, communicate, collaborate, innovate, train, share, and network with each other, in a very short period of time.
That means that for Facebook to stay the leader, it’s going to have to rapidly evolve…and in the right direction, because it’s always easier to take a wrong turn. So the key for Facebook is to realize that any IPO creates new internal rules, processes, and focuses for a company, but Facebook can’t let those things bog them down. There’s massive transformation ahead. Facebook must stay ahead of the game to remain the market leader.