The Thrill Of The Chase

Well there is one inescapable fact about the Facebook IPO: there’s a lot of poop in this bed. Just about everyone seems in on it:

  • From a purely technical trade execution perspective, the NASDAQ was in complete chaos
  • The bankers PROBABLY mispriced the biggest tech IPO ever
  • The bankers ALLEGEDLY played fancy with revenue disclosure
  • The bankers DEFINITELY lost boatloads of dough ‘supporting’ FB shares on Friday so the institutions could scurry away once they realized their orders got filled
  • As with any headline-smashing bungle, the legal locusts approach

Good detail here.

Members of the peanut gallery giggle with shadenfreude when the big boys look like idiots, and why not? We spend enough of our time reading about their bonuses and driving by their mansions wondering what it’s like to be rich. Let’s have some fun, too.

But don’t pretend that you know better. It’s not just MS: every single major bank was involved in this mess. So either me and every other Monday Morning QB would do the same in their boots or whatever would stop us from doing the same would also prevent us from getting into those boots.

So what’s the story? Could it just be that everyone got so caught up in the hype? Who knows.

We do know that Facebook didn’t need the money. This was purely paying off back compensation so everyone would just shut up and get back to coding. To the God Emperor of Facebook, the IPO must have been the most annoying of distractions.

So social dynamics played a part: like with so much in life, salesmen only chase to sell you things you don’t need. Was this the most greatest game ever played of ‘Hard to Get’?

I wish I had a satisfying theory. In my mind, I keep coming back to Chris Dixon’s excellent evaluation, which I’ll quote again:

A more likely outcome is that Facebook uses their assets – a vast number of extremely engaged users, it’s social graph, Facebook Connect – to monetize through another business model. If they do that, the company is probably worth a lot more than the expected $100B IPO valuation. If they don’t, it’s probably worth a lot less.

It’s early days for this company still and it may always be thus.

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