Prompt Cast
The Challenges and Successes of Facebook's IPO
TLDR Facebook faced challenges with trading its shares on private marketplaces and attempting a deal with Goldman Sachs, but ultimately selected Morgan Stanley as their lead left bank for the IPO in 2012. Despite facing delays, lawsuits, and a drop in stock value, Facebook successfully turned on advertising on mobile and became a leader in mobile advertising, ultimately changing the way tech companies go public.
Timestamped Summary
00:00
The hosts apologize for their previous cavalier attitude towards the 2016 election and acknowledge the responsibility of the tech industry in contributing to the current divide in America, while also introducing the idea of analyzing IPOs in addition to their normal acquisition format.
05:27
Facebook went public in 2012 after facing challenges with trading its shares on private marketplaces and attempting a deal with Goldman Sachs.
11:41
Facebook faced challenges with the SEC and Goldman Sachs when attempting to go public, but ultimately selected Morgan Stanley as their lead left bank for the IPO in 2012.
18:30
Facebook faced challenges with the SEC and Goldman Sachs when attempting to go public, but ultimately selected Morgan Stanley as their lead left bank for the IPO in 2012.
25:02
Facebook acquires Instagram for $1 billion in order to bolster their mobile presence and maintain user growth and engagement, as they realize the importance of mobile usage.
31:02
The Facebook IPO on the NASDAQ is delayed due to a technical error, causing chaos and resulting in lawsuits against NASDAQ and a loss of reputation for the exchange.
37:18
The Facebook IPO is plagued by information asymmetry and a lack of mobile strategy, resulting in a loss of reputation, shareholder lawsuits, and a significant drop in stock value.
43:43
Facebook successfully turns on advertising on mobile in Q4 of 2012, going from $0 to 23% of the entire ad revenue for the company, and ultimately becomes a leader in mobile advertising with 84% of their revenue coming from mobile ads.
50:20
Facebook's IPO provided an influx of cash, a liquid currency for shareholders, and forced management to address key risk factors and fix issues with mobile advertising.
56:17
The Facebook IPO changed the way tech companies go public, leading to longer periods of staying private and raising large amounts of money before going public.
01:02:08
The trend of tech companies going public later and restricting access to investing in these companies contributes to wealth polarization and income inequality in America.
01:07:46
The hosts discuss their criteria for grading IPOs and ultimately give the Facebook IPO an A-minus and an A-plus, respectively, with one host believing that the tumultuous times following the IPO were necessary for the company's success and the other host thinking that Facebook could have achieved the same success without the bungled year.
01:15:03
The hosts discuss the hyper-competitive nature of the tech industry and how even the largest tech IPO in history, like Facebook, can't rest on its heels because the next generation is always coming right after.
01:21:28
The hosts discuss a podcast episode about the founding of Amazon and recommend it to listeners.
Categories:
Technology
Business
