Harvard Business Publishing

You forgot to mention an important detail from that very same article you linked to: "Facebook will also allow employees to buy shares in the company."

That's pretty cool -- they're letting employees get more invested in the success of the company and they're letting some of the earliest employees enjoy some financial security. Sounds perfectly rational and legit to me.

Also, SIA brings up great points (http://www.alleyinsider.com/2008/8/is-facebook-letting-employees-cash-out-) that:
a) most employees don't have too many stock options due to the typical 4 year grant with a 1 year cliff structure in startups
b) it's only up to 20% of an employees stock options
c) this breaks down to 0.05% to 1% of Facebook's equity, valued at $20 to $40 million

"players as seemingly lost in the wilderness as Facebook is."

What makes them lost? They have a kickass product that everyone I know loves and uses. I think the scrutiny of the tech blogosphere means they get drilled for every move they make.

I think their next steps are simple:

1) Keep doing what they've been doing (which is kicking a lot of ass)
2) Play around with monetization a bit more and experiment
3) Grow

It's pretty straight forward.

Umair:

While a Viacom acquisition makes sense the founder liquidity that Mark is getting and his very, very autocratic corporate ownership structure give him the ability to refuse all but the most expensive of transactions. I don't see Viacom overeaching and diluting shareholders aggressively.

I do think employee liquidity is a sign that people want to sell as much as they can and emerge with some money while FB is this hot. The real question is how and when do hedge fund investors expect some liquidity do they expect. For Hedge Funds to get a Double on their investment FB will need to be fairly close to $1bn in revenue. I don't see this happening soon.

when the money for cashing-out doesn't come from money earned, it is a shell game. the system may work that way, but that is just a contrivance to benefit those with knowledge others don't have.

nothing good for the world here.

Lots of big companies would love to own FaceBook. It's just a question of price.

Microsoft?

Well, this is an interesting question.

You have slated facebook many times, and their team even bookmarks your stuff: http://delicious.com/davemorin

What I would be interested in hearing is what you think they should do, rather than what you think they shouldn't do.

What is your take on their suing of the German co?

What is their chance to dominate in Russian and China?

What is the future of social networking?

How should we think about next gen social network strategy.

How can we use social nets in underserved markets that don't care about technology?

Is facebook connect sufficiently open / widgetized?

Some of the you thoughts on these would be interesting.

One thing I'm unclear on is the long-term value in a company like Facebook.

I'm probably woefully ignorant on social networking, but isn't it likely that Facebook will suffer the same fate as, say, Friendster?

As opinions or attitudes change, what's to stop Facebook from being completely irrelevant? AOL was the standard for internet connectivity fifteen years ago---now only the technologically illiterate would waste money on such a pointless service.

The only reasonable endgame I can think of is using the (eventual) liquidity of an IPO to invest in other industries to create a conglomerate, a la AOL Time Warner Satan.

Facebook has real potential to become the identity provider for the web. They have potential to become a network for social commerce. They have potential to become a credible adsense competitor. They have potential to become a massive micro-payments service.

All of these aforementioned potential situations will take years to execute and scale. It seems completely reasonable that their antsy, young, staff would want to sell off a few shares in the long wait for liquidity. They want a shiny new whip, or a downpayment on a house. Otherwise, they would run off to a company that has better potential for liquidity in the near future. Facebook should be praised for giving their staff the freedom to do this instead of caving to the pressure and selling off early.

...at least you didn't jump on the valuation bandwagon like BusinessWeek.

Cash.

Companies need cash, and the (relatively immediate) next evolution of FB is availability of cash to continue.

It does not matter how much cash is in the Bank. What matters is the patience of the financiers [Microsoft?] and the terms of their financing.

FB's future could be he result of the terms of the financing.

social web > fb

"it's still about the evolving social web, stupid"

fb's strategy is based on dominance (hat-tip, Umair). dominating the social web. this (obv) is a losing battle. how can fb compete with the interweb? well erm,...it can't ;)

fb is running to the middle in an effort to make a land grab. this may seem very alluring ($15billion), but the (defacto social media platform) strategy is NOW wrong. this strategy worked before (but that was before the web - was social).

they still have one thing up their sleeve. its so glaringly obvious. staring right at their (face)book ;)