Facebook files IPO paperwork, makes graffiti artist a happy man

TAGs: Facebook, Mark Pincus, Mark Zuckerberg, Zynga

facebook-files-ipoFacebook filed its S-1 papers with the Securities Exchange Commission on Wednesday, officially declaring its intention to enter the public markets. The social networking giant is looking to raise $5b, putting its valuation somewhere around a kajillion dollars. The company will trade on the NASDAQ under the ticker symbol ‘FB’ (not, as one wag suggested, ‘LIKE’). Goldman Sachs, Morgan Stanley and JP Morgan are helping steer FB to the public trough, and can expect to reap a total 7% of the money raised via the IPO.

The S-1 filing included a statement of intent attributed to founder Mark Zuckerberg, which read in part: “Facebook was not originally created to be a company. It was built to accomplish a social mission – to help a nerd like me get a blowjob.” (Whoops… that was the rejected first draft.) The actual mission statement was “to make the world more open and connected,” i.e. more open to connecting via Facebook.

The filing also provided a little more clarity on the company’s financials. FB recorded revenues of $3.7b in 2011, up 88% over 2010. Over 85% of FB’s revenues came from advertising, which rose 68% last year. Revenues have risen each year since the $153m FB recorded in 2008, and revenues in 2011 rose with each successive quarter. Net income has also kept pace, rising from -$138m in 2007 to $1b last year. FB’s active user base grew last year by 39% to 845m (360m of which used the site six out of seven days in a recent survey), and that’s despite the fact that FB has yet to tap into the Chinese internet constituency.

Zuckerberg owns 29.2% of the pre-IPO shares, but even after the IPO, he will exercise 57% control of the company. The filing cites this as a potential negative, in that Zuckerberg could vote “in his own interests, which may not always be in the interests of our stockholders generally.” Other causes for concern come from the increasing numbers of FB users who access the site via mobile technology, as there is currently no advertising on FB’s mobile apps.

Among the countless other FB stock holders who can expect to go from rags-to-Monty-Burns-rich after the IPO, everybody’s favorite has to be David Choe, the graffiti artist who decorated the walls of FB’s first office space and who took stock in lieu of a cash payment totaling “thousands of dollars.” Choe’s efforts with a spray can are now expected to reap him upwards of $200m.

Also of note in FB’s S-1 is that 12% of FB’s 2011 revenue comes from Zynga. The social games developer was recently derided as “creatively, if not morally bankrupt” over their alleged thievery of NimbleBit’s Tiny Tower game and for drawing too much ‘inspiration’ from another company in designing Zynga Bingo. In a memo to employees, Zynga CEO Mark Pincus responded to the criticisms using the following argument:

“Google didn’t create the first search engine. Apple didn’t create the first mp3 player or tablet. And, Facebook didn’t create the first social network … We don’t need to be first to market. We need to be the best in market.” To Zynga critics, Pincus’ words will likely remind them of instructions Pincus allegedly gave his employees a few years ago: “I don’t want fucking innovation… Just copy what [Zynga’s competitors] do and do it until you get their numbers.” Then again, as Pincus later told, he thinks people in his industry “are defining innovation different from the way we are.” And intellectual property lawyers? How do they define it?


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