Facebook Can't Find Buyers For Employee Stock
Facebook CEO Mark Zuckerberg has cancelled a plan to let employees cash out their shares early.
In August, before the markets started to melt down and with Facebook worth $15 billion on paper, Zuckerberg unveiled a plan to let employees sell a small amount of their shares — no more than $900,000 or 10 percent of their stock holdings, whichever was less. The program, all but unheard of among Valley startups, was meant to appease employees who were agitating for some chance to make money from their shares. It was a revolutionary new way to reward employees, without having to go through an IPO or a sale.
The revolution is over, Zuckerberg told his company today. "I'm writing this note to let you know some bad news," he wrote in an email to all employees at the 800-person social-network startup this afternoon. "Despite a lot of work, we have not been able to finalize a plan for the employee stock sale we announced in August."
Facebook executives had been courting potential buyers for employees' shares since the summer. But as the value of Google tumbled from its high of $700 last year, would-be investors started asking questions about whether Facebook's value, too, had dropped. By last month, they were getting downright nervous.
Microsoft had invested $240 million in the company for a 1.6 percent stake in the company that valued all of Facebook at $15 billion, but that deal came with extras: Microsoft bought preferred shares, which get paid off first if the company's bought, and it also got an advertising deal with Facebook at the same time.
Facebook's common shares, meanwhile, have a value that put the whole company's worth at around $4 billion. Or they did. A source close to potential investors said they wanted to buy shares from employees at a lower valuation, or with guarantees similar to Microsoft's. To reward a small number of employees who had enough shares to benefit from the program, Zuckerberg would have had to give away something for nothing.
Speaking of trying to find buyers for Facebook stock, how did CFO Gideon Yu's conversations go in Dubai?
Read Owen's whole post here >
See Also: Facebook Now Worth About $4 Billion, Revenue Light
They really needed an Eric Schmidt, an (older) adult to lead the youngsters.
Visionaries are great but business sense has to rule the day at some point.
Another one close to running out of cash is Brightcove if you are good at reading tea leaves, though that is only a guess.
There's no rule that says that Facebook social networking is worth anything.
I know this may sound harsh to those of you who love Facebook but they seem to be surviving on investment capital rather than revenues. The internet seems to be the only place in the world where investors are stupid enough to keep pouring money in year after year while the so-called 'company' continues to fail to generate profits.
I fully expect Facebook to shrivel and possibly die in the not too distant future simply because the kids than run it don't have a clue about how to make it into a real business. They are like children who are still playing with all that investment capital like it's a game or something, and all the while investors are watching NOTHING HAPPEN to make their investments worth something in the future.
It's no wonder those employees want to cash in on some of their stock. After all, how long should they (or other investors) have to wait for the head honcho to become an adult and a serious businessman for a change? Sooner or later SOMEONE must take responsibility and start making a business out of it, don't you think???
If you're surprised that I sound like I'm fed up with the ridiculous concept of social websites calling themselves 'businesses' you're right. Maybe some of them can figure out how to become viable businesses, but my prediction is that during the next few years most of them are going to fail miserably.
The good thing about this is that stupid investors will finally be weeded out of the system, and so will stupid startups. Then only intelligent investors who demand a viable BUSINESS PLAN from the beginning will be left to fund future internet startups -- and the startups they fund will have 1000 times better chance of becoming self-supporting businesses in the future than nearly every social startup I've seen in the past 5 years.
And thank God when this happens, it's taken WAY too long already in my opinion.
http://mashable.com/images/facebookbigshot1.png
and I think that Owkaye is right.
Mark's interests in market share "domination", and "exponential growth" are good from a business standpoint, and while his reading habits and work habits match Bill Gates, Mark's business/profit side focus does not match Bill's for what I have seen and studied of them both.
While not as extreme, Mark might have almost like a Linux or Craigslist mentality where the de-facto focus is not on necessarily building a profit machine. I get the feeling it's perhaps even the investors who are really driving the profit initiatives and that perhaps Mark just likes "making stuff". I feel like the focus is more on "changing the world" than chasing profits (which would also fund further changing the world).
Anyways, I hear lots of good things about Mark, and I hope he'll move into the front room here so I have a buddy to work, program and read biographies and textbooks with during my 100 hour work weeks. Ah Mark, we're like twins who both have like no lives outside of web work.
okeyewear.com
Mark admitted himself that they are not even THINKING about a business model right now. Crazy...
Ben Fremer: Craigslist makes millions of dollars with the paid ads section. Yes, Craig could have sold it for billions already, but it's his personal choice to keep it as a philantrophic, yet moneymaking venture. I deeply admire the man for his character.